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Recent market correction have provided an opportunity to buy high growth stocks at better valuations compared to what they were trading a month ago. Following is a list of major mid and large cap companies with over 50% topline growth rates according to the consensus sell side estimates:

Ticker

Company Name

Sales Next Year Growth (%)

Market Cap (Millions)

BIDU

Baidu Inc.

53.12

$44176.91

ESV

ENSCO plc

51.95

$9639.22

OTCPK:FIATY

Fiat spa

65.99

$6166.52

GMCR

Green Mountain Coffee

60.89

$13077.12

VRTX

Vertex Pharmaceuticals

175.25

$9463.84

In addition to the above companies, I believe sell side analysts have slightly conservative estimates for the following two companies and these companies can also show over 50% topline growth rates:

Ticker

Company Name

Sales Next Year Growth (%)

Market Cap (Millions)

LNKD

LinkedIn Corp.

47.3

$7340

YNDX

Yandex N.V.

43.3

$10160

I believe Baidu, Yandex and LinkedIn are good long candidates among above stocks.

Baidu Inc. is the market leader in the Chinese Internet search market with an 80% market share. The business has high barriers to entry and even Google wasn’t able to meaningfully challenge Baidu’s dominance in the past. Going forward, I believe Baidu can continue to post 50% plus growth for next several years. China’s total online advertising spend to GDP ratio is still 5-8 years behind US.

Thus, there is a secular tailwind for leading search companies as the normalization occurs and Baidu being a dominant player will be the likely beneficiary. Baidu is expected to post EPS of $2.90 in the current year and $4.37 in the next year. It is trading at 30x forward P/E which is reasonable given its 50% growth rate.

Yandex N.V. is the similar story in Russian market. Yandex is Russia’s largest internet search company and has 65% traffic share and 70% revenue share. Yandex is expected to post EPS of $0.58 in the current year and $0.86 in the next year. It is trading at 36x forward P/E and is expected to post 50% EPS growth rate.

In addition to the above search companies, I also like LinkedIn Corp. which is a web 2.0 professional networking website. I don’t think LinkedIn is overvalued at its $7 billion valuation. Although LinkedIn is expected to post just $513 million in revenues this year, the big opportunity lies as it continues to gain market share from Web 1.0 sites like Monster Worldwide (MWW).

Monster currently has around $1 billion in annual revenues and eventually LinkedIn is likely to capture most of it. Further, since LinkedIn is a web 2.0 company with lower costs required for branding and marketing, it is likely to post much higher late-stage margins.

Also, LinkedIn has a dominant market position in a lot of other locations which can also drive meaningful growth going forward. For eg., according to Alexa rankings LinkedIn is the 8th most visited website in India. India’s current market leader in job search is naukri.com which is the 21st most visited website in India. Once LinkedIn starts marketing its services in India, I don’t think it would be very difficult for it to topple naukri.com. Naukri's parent company Info Edge India is listed on the Indian exchange and has a market cap of $840 million currently.

In addition to job search, LinkedIn has revenue streams in form of subscription and advertisements. There can be even more opportunities to monetize the LinkedIn platform going forward. I believe LinkedIn will prove to be a very profitable investment in the long term if it is able to maintain its current leadership position in the professional networking space.

For other companies in the above list here are some of the basics about their business and analyst opinions on them.

Ensco plc is a global offshore contract drilling company. The company’s business operates in four segments: Deep water, Asia Pacific, Europe and Africa, North and South America. Out of 38 analysts covering the company, 29 have buy ratings and nine have sell ratings.

Fiat SpA is an Italy-based company active in the automobile sector. The Company designs, produces and sells cars under the Fiat, Lancia, Alfa Romeo, Fiat Professional, Abarth, Ferrari, Maserati, Chrysler, Dodge, Jeep and Ram Truck brands. One analysts covers the company and has an underperform rating on the stock.

Green Mountain Coffee Roasters, Inc. is engaged in the specialty coffee and coffee maker businesses. The company operates in two business segments: The specialty coffee business unit and the Keurig business unit. Out of 11 analysts covering the company eight have buy ratings, one has a sell ratings and two have hold ratings.

Vertex Pharmaceuticals Incorporated is engaged in the business of discovering, developing and commercializing small molecule drugs for the treatment of diseases. The company is engaged in phase-I clinical trials and/or nonclinical activities with respect to a range of additional drug candidates, including compounds intended for the treatment of hepatitis C virus infection, cystic fibrosis and influenza. Out of 26 analysts covering the company 13 have buy ratings, 11 have hold ratings and two have sell ratings.

Source: 7 Companies With High Topline Growth Rates