Seeking Alpha
Profile| Send Message|
( followers)  

What follows is a list of companies that are rated favorably on the Street and have a 5-year earnings growth rate above 20%. They cover a variety of different industries: mining, pharmacy, automobiles, semiconductors, and iron & steel. Of the five, CVS Caremark (NYSE:CVS) is the most preferred with a "strong buy" rating. After the acquisition of UAD's Part D business, CVS is uniquely capable of benefiting from healthcare reform and losses at Walgreen (WAG).

Barrick Gold (NYSE:ABX)

Barrick is rated near a "strong buy" on the Street and trades at a respective 11.4x and 8.7x past and forward earnings with a dividend yield of 1.2%. It has a 5-year earnings growth rate of 51.5% and is 60% less volatile than the broader market.

Consensus estimates for Barrick's EPS forecast that it will grow by 46.7% to $4.87 in 2011 and then by 16.2% and 19.3% more in the following two years. Assuming the multiple holds steady and a conservative 2012 EPS of $5.62, the rough intrinsic value of the stock is $64.07, implying 29.4% upside.

Click here for more analysis.

CVS Caremark

CVS is rated a "strong buy" on the Street and trades at a respective 16.8x and 13.1x past and forward earnings with a dividend yield of 1.5%. It has a 5-year earnings growth rate of 23.2% and is 20% less volatile than the broader market.

Consensus estimates for CVS' EPS forecast that it will grow by 4.1% to $2.80 in 2011 and then by 15.4% and 12.7% more in the following two years. Modeling a CAGR of 10.6% for EPS over the next three years and then discounting backwards by a WACC of 9% yields a fair value figure of $46.35, implying 9.2% upside.

Click here for more analysis.

Ford Motors (NYSE:F)

Ford is rated a "buy" on the Street and trades at a respective 7.4x and 7.8x past and forward earnings with a dividend yield of 1.6%. It has a 5-year earnings growth rate of 32.1% and is 140% more volatile than the broader market.

Consensus estimates for Ford's EPS forecast that it will decline by 3.7% to $1.84 in 2011, decline by 15.8% in 2012, and then grow by 17.4% in 2013. Assuming a multiple of 11x and a conservative 2012 EPS of $1.48, the rough intrinsic value of the stock is $16.28, implying 33.3% upside.

Click here for more analysis.

Intel (NASDAQ:INTC)

Intel is rated a "buy" on the Street and trades at a respective 11.1x and 10.2x past and forward earnings with a dividend yield of 3.1%. It has a 5-year earnings growth rate of 20.7% and is 10% more volatile than the broader market.

Consensus estimates for Intel's EPS forecast that it will grow by 0.8% to $2.41 in 2012 and then by 7.9% and 8.1% more in the following two years. Of the 38 revisions to estimates, 27 have gone up for a net change of 1.1%. Assuming a multiple of 14x and a conservative 2013 EPS of $2.54, the rough intrinsic value of the stock is $35.56, implying 33% upside.

Vale (NYSE:VALE)

Vale is rated a "buy" on the Street and trades at a respective 5.4x and 6.2x past and forward earnings with a dividend yield of 0.1%. It has a 5-year earnings growth rate of 30% and is 60% more volatile than the broader market.

Consensus estimates for Vale's EPS forecast that it will grow by 39.3% to $4.50 in 2011, decline by 12.4% in 2012, and then grow by 0.3% in 2013. Of the 10 revisions to estimates, all have gone down for a net change of -2.5%. Assuming a multiple of 7x and a conservative 2012 EPS of $3.88, the rough intrinsic value of the stock is $27.16, implying 9.9% upside.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 5 Companies With Earnings Momentum That Wall Street Loves