Occasionally we look for companies that have an above average track record in sales, earnings, and stock price. Today we’ll take a look at five companies whose stock price at least doubled over the past two years. We also picked these stocks because we feel that they still have plenty of room to grow. We think that they’ll beat the market’s performance over the next five to ten years.
Amazon (AMZN) , the international online retailer, had a strong comeback after the internet bubble burst in 2000. Amazon enjoyed a nice run since the end of the internet bear market from 2000 – 2003. Their stock grew from the mid to low $30s up to over $200 before the recent market correction. In the past five years they have enjoyed an average annual earnings growth of 44%. Expect them to blow away their annual earnings estimates for the next five years of 27.5%. They have a nice positive cash flow of $3.18 billion with zero debt. With their focus on selection, prices, and convenience, look for Amazon to remain the leader in online purchasing for years to come.
Baidu Inc. (BIDU), the Chinese and Japanese language equivalent of Google (GOOG) is the leader of web search in China and headquartered in Beijing. Baidu provides an index of over 740 million web pages, 80 million images, and 10 million multimedia files. They have grown earnings annually the last five years at the incredible rate of 87% and are expected to grow them at 46% annually for the next five. You will need a strong stomach for this one since it has experienced swings in their stock price of $30 in both directions recently. However, this may make it attractive to short-term traders as they can trade in and out of the stock between oversold and overbought periods. Holding it for the next decade will also most likely turn out well as the Chinese grow their middle-class with millions of new internet users needing Baidu’s internet search features.
HMS Holdings Corporation (HMSY) is a company that was founded in 1974 and headquartered in New York City. Their services include: cost containment, audit programs, coordination of benefits, consulting, and program integrity services. These services enable clients to recover amounts due from liable third parties, reduce fraud, and ensure regulatory compliance. Their clients include: Medicare managed care plans, state Medicaid agencies, pharmacy benefit managers, child support agencies, the Veterans health administration, the Centers for Medicare, and government and private self-funded employers. HMS Holdings has experienced annual earnings growth of 51.9% the past five years and is expected to earn at least 24% annually for the next five.
Perrigo (PRGO) is a leading international healthcare supplier that manufactures and distributes over the counter (OTC) and prescription pharmaceuticals. Their OTC products include vitamins, dietary supplements, cough & cold remedies, analgesics, and gastrointestinal products. Their prescription pipeline contains over 40 generic versions of brand name products which includes: an extensive line of skin products, an ibuprofen generic, diabetes medicine, antibotics, etc. The full list can be found at www.perrigo.com. Perrigo has enjoyed average annual earnings growth of 41.8% the past five years and is expected to have average annual earnings growth of 13.4% for the next five years. Their stock has gone from the single digits to the $90s in the past decade.
SXC Health Solutions (SXCI) provides pharmacy benefit management services and healthcare information technology solutions in North America. Basically, they collect and analyze data to improve consumer health while also lowering costs. They are operating with the following positive statistics: zero debt, PEG of 1.32, above average earnings growth, and their stock is trading at a little over 5 times book value per share at its current price of around $50. SXCI has actual average annual earnings growth of 50.95% for the last five years and is expected to get 25% annual earnings growth for the next five years.
Just keep in mind that these are all momentum stocks, which gives them more downside risk than the steady Warren Buffett style stocks such as Coca Cola (KO), American Express (AXP), Walmart (WMT), Kraft (KFT), etc. If any of the 5 momentum stocks mentioned in this article were to miss earnings estimates, their stocks could take an unpleasant tumble. However, we think that they still have plenty of room to grow. Their current earnings estimates are on the conservative side, so most of these offerings (if not all of them) will probably blow them away and their stock prices will continue to rock higher.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.