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Measuring a company’s efficiency in controlling its costs is imperative to the company’s bottom line. Gross margins may vary dramatically from one industry to the other. Manufacturing, retail, and chemical companies will definitely not have the same level of gross margins as, for instance, software companies.
To bring an overall balance to the mix, I’ve also included high EPS growth companies with strong PEG ratios. I’ve chosen more than a dozen stocks that have the following criteria combinations: have had their EPS rise over 20% in the last 5 years, have maintained a PEG ratio of less than 1, and gross margins of over 70%.
Company NameTickerGross MarginsEPS Growth (past 5 yrs.)PEG
BioMarin Pharmaceutical Inc.BMRN81.28%37.13%0.89
Copa Holdings SACPA72.54%23.10%0.90
CTC Media, Inc.CTCM94.40%20.26%0.15
Concho Resources, Inc.CXO83.04%54.67%0.89
Cyberonics Inc.CYBX87.66%54.19%0.62 Ltd.CYOU88.47%24.75%0.22
Dolby Laboratories, Inc.DLB88.09%37.39%0.65
DFC Global Corp.DLLR95.57%46.17%0.78
Dynex Capital Inc.DX72.91%32.24%0.85
Ebix, Inc.EBIX79.21%57.95%0.57
Gilead Sciences Inc.GILD75.52%31.09%0.75
Quicksilver Resources, Inc.KWK86.42%35.22%0.79
NuVasive, Inc.NUVA81.52%96.65%0.60
Perfect World Co.PWRD82.48%24.69%0.29
World Acceptance Corp. WRLD77.42%22.79%0.89
Source: 16 High Gross Margins Coupled With Steady Earnings Growth