Looking to add European stocks to your portfolio? The European stock market showed great improvement in 2012. Will we see a similar performance in 2013? With this in mind, we created a list of high growth European stocks with strong inventory trends.
We began by screening for US-traded stocks of companies based in Europe for those with high earnings growth, with 5-year projected EPS growth above 15%. We found 32 stocks that met the criteria.
We wanted to research at least one fundamental statistic, which might have contributed to the EPS growth. We analyzed the financials and screened for those with strong sales trends by comparing growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.
Our final list consisted of 3 high-growth stocks with encouraging inventory trends.
A closer Look
We took a closer look at Tornier N.V. (NASDAQ:TRNX). The stock trades around $17.22 versus its 52-week high of $25.91, down 12% in the past 1-year. The company does not pay a dividend. Other companies in its peer group such as Smith & Nephew (NYSE:SNN), and Zimmer Holdings (ZMH) pay a dividend of 1.78%, and 0.95%, respectively.
Tornier is expected to report earnings on February 21st, 2013. Analysts expect the company to report a loss of $0.06, and revenues of $77 million, up 12% from last year. EPS growth in the next 5 years is expected to be 22.5%.
As of September 30th, 2012, the company has cash and cash equivalents of $59 million, and long-term debt of $21 million.
In the third quarter of 2012, the company completed its acquisition of Orthohelix. Including OrthoHelix sales of $7-$8 million, Tornier now expects sales for the fourth quarter of 2012 to be in the range of $77-$80 million, and $274-$277 million for full year 2012. This is an improvement from sales of $261 million in 2011. The company expects to introduce 10-12 new products every year. Hence maintain its leadership in the industry. The total Extremities market of $6.5 billion with a compound annual growth rate (OTCPK:CAGR) of 7-9% presents a great opportunity for the company, which continues to grow its presence.
We encourage potential investors to analyze any forward looking statements made by the company.
Given a strong liquidity position, encouraging inventory trends, and the high-growth potential, would you invest in the company?
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall (kapitall.com). More investing ideas on Kapitall Wire (wire.kapitall.com).
Do you think these companies will meet their high growth projections? Use this list as a staring point of your analysis.
1. Core Laboratories NV (NYSE:CLB): Provides reservoir description, production enhancement, and reservoir management products and services to the oil and gas industry worldwide.
- Market cap at $6.07B, most recent closing price at $131.81.
- Country: Netherlands.
- Revenue grew by 6.09% during the most recent quarter ($245.43M vs. $231.34M y/y). Inventory grew by 2.42% during the same time period ($53.81M vs. $52.54M y/y). Inventory, as a percentage of current assets, decreased from 20.65% to 17.87% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).
- 5-year projected EPS growth at 18%.
2. Novo Nordisk A/S (NYSE:NVO): Engages in the discovery, development, manufacture, and marketing of pharmaceutical products in Denmark and internationally.
- Market cap at $86.98B, most recent closing price at $192.29.
- Country: Denmark.
- Revenue grew by 20.04% during the most recent quarter ($19,845M vs. $16,532M y/y). Inventory grew by 3.96% during the same time period ($9,414M vs. $9,055M y/y). Inventory, as a percentage of current assets, decreased from 23.34% to 23.02% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).
- 5-year projected EPS growth at 17%.
3. Tornier N.V. : Operates as a medical device company that designs, manufactures, and markets devices for joint replacement and soft tissue repair that enable surgical specialists to improve patients' lives by restoring motion and physical vitality.
- Market cap at $718M, most recent closing price at $17.18.
- Country: Netherlands.
- Revenue grew by 0.8% during the most recent quarter ($58.02M vs. $57.56M y/y). Inventory grew by -5.09% during the same time period ($81.37M vs. $85.73M y/y). Inventory, as a percentage of current assets, decreased from 42.01% to 39.82% during the most recent quarter (comparing 13 weeks ending 2012-09-30 to 13 weeks ending 2011-10-02).
- 5-year projected EPS growth at 23%.
*Accounting data sourced from Google Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.