Are you a growth investor that digs deep into a company's financial statements? Today we focused on financial companies whose fundamentals indicate that not only are these companies growing fast, but they're doing so in right way: by steadily raking in profits. If you prefer companies that can reliably grow over the long term, you'll like the list we came up with today.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
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. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for financial stocks. We then looked for companies with strong profit margins (1-year operating margin>15%)(Net Margin [TTM]>10%). We then screened for businesses that are considered high-growth, with 5-year projected EPS growth above 25%. We did not screen out any market caps.
Do you think these stocks will go up in valuation? Use this list as a starting-off point for your own analysis.
1) HDFC Bank Ltd. (HDB)
|Industry:||Foreign Regional Banks|
HDFC Bank Ltd. has a Operating Profit Margin of 42.03%, a Net Margin of 28.73%, and a 5-Year Projected Earnings Per Share Growth Rate of 26.25%. The short interest was 0.59% as of 06/26/2012. HDFC Bank Limited, together with its subsidiaries, provides retail banking, wholesale banking, treasury, and other financial services to individual and business customers in India. It offers various deposit products, including current accounts, savings accounts, salary accounts, fixed and recurring deposits, demat accounts, safe deposit lockers, and rural accounts; loan products comprising personal, home, car, two wheeler, educational, and rural loans, as well as loans against assets and government sponsored programs; credit, debit, and prepaid cards; travel, remittance, and other foreign exchange services; and private banking services. The company also provides stock broking services to access and trade in various investment products, such as equities, derivatives, currency futures, mutual funds, IPOs, bonds, corporate fixed deposits, and insurance products; equity Investment advice and an execution platform; and asset management services to manage various mutual funds, including children's gift funds, fund of fund schemes, debt/income funds, fixed maturity plans, equity/growth funds, liquid funds, exchange trade funds, and quarterly interval funds. In addition, it offers real estate services to facilitate buying, selling, or leasing of residential/commercial properties; life, health, motor, travel, home, personal accident, and commercial insurance products; and loans for business expansion, working capital requirements, school admissions, weddings, and vacations.
2) Pacific Capital Bancorp (PCBC)
|Industry:||Regional - Pacific Banks|
Pacific Capital Bancorp has a Operating Profit Margin of 24.93%, a Net Margin of 24.91%, and a 5-Year Projected Earnings Per Share Growth Rate of 46.50%. The short interest was 12.51% as of 06/26/2012. Pacific Capital Bancorp operates as the bank holding company for Santa Barbara Bank & Trust, National Association that provides various commercial and consumer banking services to households, professionals, and businesses. It offers depository services, such as checking accounts, interest-bearing checking accounts, money market demand accounts, individual retirement accounts, savings accounts, and certificates of deposit. The company also provides loan products, including commercial and industrial loans, commercial real estate loans, lines of credit, letters of credit, asset based lending, construction loans, and land acquisition and development loans to small business and middle market commercial clients; residential real estate loans, home equity lines and loans, and consumer loans to individual clients; and small business administration loans.
3) Noah Holdings Limited (NOAH)
Noah Holdings Limited has a Operating Profit Margin of 28.62%, a Net Margin of 28.48%, and a 5-Year Projected Earnings Per Share Growth Rate of 26.90%. The short interest was 5.09% as of 06/26/2012. Noah Holdings Limited, through its subsidiaries and variable interest entity, engages in the distribution of OTC wealth management products to the high net worth population in China. It markets and distributes various categories of products supplied by third party product providers, based on the underlying assets class, such as fixed income products, including collateralized fixed income products sponsored by trust companies and other products that provide investors with fixed rates of return; private equity funds products comprising investments in private equity funds sponsored by domestic and internal fund management firms; securities investment funds, which are privately raised funds investing in publicly traded stocks; and investment-linked insurance products. The company also offers proprietary wealth management products, such as private equity fund of funds; and provides various value-added services to clients, including financial planning, product analysis and recommendation, product and market updates, and investor education.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.