Are you a growth investor looking to get in on a stock before it becomes everybody's favorite pick? If so, one great place to look is in the mid-cap space, where stocks still have room to grow before joining the ranks of their larger peers. Keeping this idea in mind, today we screened for mid caps that have strong growth on the horizon, due to having sound records of profitability. We think you'll find the list we came up with pretty interesting.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability.
Net Margin = Net Income/Total Revenue
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for mid cap stocks. We then screened for businesses that have strong bottom line profitability (Net Margin [TTM]>10%)(1-year fiscal EPS growth rate>10%). Next, we then screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these mid-cap stocks will go up in valuation? Use our list to help with your own analysis.
1) Cabot Oil & Gas Corporation (COG)
|Industry:||Independent Oil & Gas|
Cabot Oil & Gas Corporation has a Net Margin of 12.26%, a Earnings Per Share Growth Rate of 18.19%, and a 1-Year Projected Earnings Per Share Growth Rate of 74.47%. The short interest was 5.52% as of 06/26/2012. Cabot Oil & Gas Corporation, an independent oil and gas company, engages in the development, exploitation, exploration, production, and marketing of natural gas, crude oil and, and natural gas liquids in the United States. The company's properties primarily located in Appalachia, east and south Texas, and Oklahoma. It also transports, stores, gathers, and produces natural gas for resale.
2) AuRico Gold Inc. (AUQ)
AuRico Gold Inc. has a Net Margin of 33.97%, a Earnings Per Share Growth Rate of 176.17%, and a 1-Year Projected Earnings Per Share Growth Rate of 47.06%. The short interest was 1.78% as of 06/26/2012. AuRico Gold Inc. engages in the exploration, development, and production of gold and silver projects and properties in Canada, Mexico, and Australia. Its principal property includes the Ocampo mine covering approximately 15,000 hectares located in Chihuahua State. The company was formerly known as Gammon Gold Inc.
3) Aspen Technology, Inc. (AZPN)
|Industry:||Business Software & Services|
Aspen Technology, Inc. has a Net Margin of 14.35%, a Earnings Per Share Growth Rate of 109.09%, and a 1-Year Projected Earnings Per Share Growth Rate of 450.00%. The short interest was 3.57% as of 06/26/2012. Aspen Technology, Inc., together with its subsidiaries, provides integrated process optimization software solutions for manufacturers in process industries, and engineering and construction firms. It designs and develops aspenONE suite software applications for use in the engineering, manufacturing, and supply chain business areas. The company's aspenONE engineering software includes Aspen Plus and Aspen HYSYS, which are process modeling software products for conceptual design, optimization, and performance monitoring; Aspen Basic Engineering, a workflow tool that allows engineers to build, re-use, and share process models and data; Aspen Economic Evaluation, an economic evaluation software for estimating costs of conceptual process designs; and Aspen Exchanger Design and Rating, a software used to design, simulate, and optimize the performance of heat exchangers.
4) American Campus Communities Inc. (ACC)
|Industry:||REIT - Residential|
American Campus Communities Inc. has a Net Margin of 11.29%, a Earnings Per Share Growth Rate of 65.09%, and a 1-Year Projected Earnings Per Share Growth Rate of 59.72%. The short interest was 4.65% as of 06/26/2012. American Campus Communities, Inc. is an independent equity real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in developing, owning, and managing high-quality student housing communities.
5) The Carlyle Group LP (CG)
The Carlyle Group LP has a Net Margin of 20.44%, a Earnings Per Share Growth Rate of 10.31%, and a 1-Year Projected Earnings Per Share Growth Rate of 36.00%. The short interest was 2.92% as of 06/26/2012. The Carlyle Group is an investment firm specializing in direct and fund of fund investments. Within direct investments, it specializes in management-led buyouts, divestitures, strategic minority equity investments, equity private placements, consolidations and buildups, leveraged finance, and venture and growth capital financings. The firm typically invests in agriculture, aerospace, defense, automotive, consumer, retail, industrial, infrastructure, energy, power, healthcare, software, technology, real estate, financial services, transportation, business services, telecommunications, and media sectors.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.