When looking for investments that I believe will do better than the general market I like to find companies that not only are growing quarter to quarter but are projecting revenue growth for the future year of at least 70%. Of course I also look at companies who either have high margins or who have a business model that will provide high margins once the early development stage has laid the ground work for this future growth. There are four stocks that I have identified that either through the companies owns projections or
analysts’ estimates are predicting a large ramp up in growth for 2012. All four are in separate sectors which while it may limit the overall return it will also help limit losses if one sector underperforms for macroeconomic reasons that were not foreseen at the beginning of this year.
Augment Technologies (AUGT.OB)
Augme Technologies, Inc. provides strategic services and mobile marketing technology to leading consumer and healthcare brands. Using its own patented device-detection and proprietary mobile content adaptation software, AD LIFE™ solves the mobile marketing industry problem of disparate operating systems, device types, and on-screen mobile content rendering. Recently Augme’s subsidiary Hipcricket was called by Frost & Sullivan “The Preferred Provider of High Impact Mobile Marketing Solutions in the United States ”
Recent large wins include Ford which can be seen by the QR codes that are now part of most Ford Dealership ads and a large program that has just started up with Mattel’s Hot Wheels brand.
The company just preannounced for the 3rd quarter ending Dec 2nd. Revenues were a minimum of $4.4M which is up over 5 times last year’s 3rd quarter and over 3 times the previous quarter. Estimates from the company have revenues for this year being up 4-5 times from last year. Recent analyst’s estimates have next year’s revenues in a range of $34 to $38M which should be around 3 times this year’s numbers. Margins will continue to grow as their Software as a Solution (SaaS) revenues start to gain traction in the coming year.
Bacterin International Holdings, Inc. (BONE)
Bacterin is a leading medical device designer and manufacturer focused on dermal and skeletal health that designs, manufactures and markets revolutionary bone graft material, biological scaffolds and related medical devices. They also design and produce bioactive, anti-microbial coatings for implantable devices and will be launching multiple products in this specific area in 2012.
One of the company’s competitors, Medtronics (MDT), which produces a competing product to Bacterin's OsteoSponge called INFUSE ($750M yearly revenue) was recently negatively brought into the spotlight due to recently released follow up studies. Bacterin’s core product, OsteoSponge, is 1/3 the price of INFUSE and a recent positive 2 year follow up study reported the following:
The two-year post-operative, clinical data showed OsteoSponge to be equivalent to rhBMP-2 in achieving an interbody fusion based upon radio graphic assessment, CT scans, and quality of life outcomes. Additionally, patients receiving the OsteoSponge graft reported statistically significant less leg pain atone year relative to the rhBMP-2 group.
Recently the company reported 3rd quarter numbers of $7.5M which was 80% higher than last year’s 3rd quarter. Management is projecting minimum revenues of $30-32M for this year and in the range of $53M-56M for next year which will be up another 75%. Margins are expected to remain in the 75-80% range.
Mitek Systems, Inc. (MITK)
Mitek Systems, Inc. is the leader in Mobile-imaging applications using smart phone and tablet cameras for check deposits, bill payments and mobile ecommerce. Mobile Deposit® , an app that enables customers to deposit checks by simply snapping photos of them, is now used by 6 of the top 10 retail banks in the U.S. and more than 80 other financial institutions. Mobile Deposit® signed customers more than doubled to 161 financial institutions over the past quarter, including the signing of an additional Tier 1 bank. Among these financial institutions, 35 have now formally launched Mobile Deposit to their customers. Mitek has signed agreements with seven of the top 10 U.S. banks.
Mitek solutions work with the iPhone, Android, BlackBerry and tablets. The server-side system is phone-agnostic, meaning the server’s interaction with the device does not know or care what type smart phone or tablet the users has. Mitek’s unique technologies and patents are targeted directly at recognizing and capturing mobile images, providing industrial strength processing that simply cannot be achieved with traditional approaches, and simple OCR techniques.
In the recent year that just ended revenues doubled from the prior year to $10M Analysts have revenues doubling again next year to $24M and then almost doubling again to $44M. I suspect mobile payments could increase those numbers as the mobile wallet and smart phones continue to increase usage. Margins were in the 80-90% area for the last year and most recent quarter.
Northern Oil and Gas (NOG)
Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas properties in the Williston Basin Bakken play. During the third quarter of 2011, Northern Oil acquired leasehold interests covering an aggregate of 6,300 net mineral acres for an average of $1,880 per net acre and an aggregate cost of approximately $11.8 million. As of September 30, 2011, Northern Oil controls more than 158,000 net acres in the Williston Basin Bakken and Three Forks play of which 58,000 net acres are either developed (held by production) or under the bit, which represents approximately 37% of Northern Oil's total Bakken and Three Forks acreage position at September 30, 2011.
Average daily production in the third quarter of 2011 was approximately 5,900 BOE per day ("BOEPD"). September 2011 daily production averaged approximately 7,000 BOEPD. Third quarter 2011 production consisted of approximately 93% crude oil and 7% associated natural gas and other liquids. Fourth quarter production number are expected to increase 25-35%. Analysts' expectations are for revenues to double from approximately $150M for FY11 that ends December 31st to over $300M for next year. Given that oil has now moved up in price in recent months this will only enhance earnings going forward as 93% of their production is oil.
Companies that are predicting large growth in revenues and that see earnings based on this growth will be top performers as long as they meet expectations. Ones that can actually do better than expectations will provide an even higher return.