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Tuesday's Wall Street Journal had an article that asked the question "Can Rally Run without Revenue?" Is the revenue situation really that bad?

Let's take a quick look at some the data compiled through the Alert HQ process.

After each quarter's earnings season, I try to pull together what I am now calling the Growth Report. Part 1 compiles the list of stocks that have shown a year-over-year increase in both revenue and earnings AND a sequential quarter-over-quarter increase in both revenue and earnings. Given the severity of the economic downturn, very few companies have been able to to pull off this trick.

The following table presents a comparison of the last two quarters:

Q1-2009Q2-2009
In S&P 5002741
Total218312

The number of stocks in the S&P 500 that qualify as growth leaders and have made it onto the Q2 Growth Report has grown by 50%.

Similarly, looking at the entire stock market, the number of growth leaders has almost doubled in Q2 as compared to Q1.

The following chart shows the S&P 500 over the course of the last couple of years. This chart shows that in a year-over-year comparison stock prices, as well as revenues and earnings, were considerably higher than they are currently. This indicates what an accomplishment it is to have made it onto our Growth Report.


Repeat winners

Note that there are 66 stocks that made the list in both quarters. These guys are the real growth leaders so I feel compelled to list them all here:

SymbolName
AFAMAlmost Family Inc
AIRMAir Methods Corporation
AMEDAmedisys Inc
APTALPHA PRO TECH, LTD.
ASIAAsiaInfo Holdings, Inc.
BUCYBucyrus International, Inc.
CACCCredit Acceptance Corporation
CACICACI INTERNATIONAL CLA
CFSGChina Fire & Security Group, Inc.
CMCSAComcast Corporation
CMCSKComcast Corporation
CMGCHIPOTLE MEXICAN GRILL, INC.
CNQRConcur Technologies, Inc.
CNUCONTINUCARE CORPORATION
COCOCorinthian Colleges, Inc.
CRMSALESFORCE.COM, INC.
CRNCORNELL COMPANIES, INC.
CTFOChina TransInfo Technology Corp.
CUBCUBIC CORPORATION
CYHCOMMUNITY HEALTH S. (NEW)
DGXQUEST DIAGNOSTICS INC.
DLMDEL MONTE FOODS COMPANY
EBIXEbix Inc
EBSEMERGENT BIOSOLUTIONS, INC.
EMSEMERGENCY MEDICAL SERVICES CORPORATION
ESLTElbit Systems Ltd.
FCNFTI CONSULTING, INC.
FMRFIRST MERCURY FINANCIAL CORPORATION
GTSTRIPLE-S MANAGEMENT CORP.
GXDXGenoptix, Inc.
HGRDHealth Grades, Inc.
HTSHATTERAS FINANCIAL CORP.
IDCCInterDigital, Inc.
INMDIntegraMed America, Inc.
JJSFJ & J Snack Foods Corp.
LHLABORATORY CORP. OF AMER.
LINCLincoln Educational Services Corporation
MEDMEDIFAST, INC.
MHSMEDCO HEALTH SOLUTIONS, INC.
MTRMESA ROYALTY TRUST
NHCNATIONAL HEALTHCARE CORP.
ORLYO'Reilly Automotive, Inc.
PEGAPegasystems Inc.
OTCPK:PSYSPsychiatric Solutions, Inc.
RAXRACKSPACE HOSTING, INC.
RGRSTURM, RUGER & COMPANY, INC.
RMDRESMED INC.
ROSTRoss Stores, Inc.
SEPSPECTRA ENERGY PARTNERS, LP
SFSTIFEL FINANCIAL CORP.
SNAKThe Inventure Group, Inc.
SQMSOCIEDAD QUIMICA Y MINERA DE CHILE SA
SRCLStericycle, Inc.
SVTSERVOTRONICS, INC.
TNDMNeutral Tandem, Inc.
TRCRTranscend Services, Inc.
TRUTORCH ENERGY ROYALTY TRUST
TSTCTelestone Technologies Corp.
TTEKTetra Tech, Inc.
TYLTYLER TECHNOLOGIES, INC.
UHTUNIVERSAL HEALTH REALTY INCOME TRUST
VITVANCEINFO TECHNOLOGIES INC
VRVALIDUS HOLDINGS, LTD.
WMS-OLDWMS INDS, INC.
WOOFVCA Antech, Inc.
YORWThe York Water Company


Conclusion

So the Wall Street Journal has a point. It's true that cost cutting can't support rising stock prices for long; however, it's clear that slowly but surely revenues and earnings are indeed improving. There has been a significant increase in the number of stocks that are making our rather exclusive club of growth leaders. That can't be bad for the market outlook.

Click this link to download a spreadsheet that lists all the individual stocks that qualified for the Q2 Growth Report.

Continue to Part 2 >>

Source: Q2 Growth Report - Part I