The stocks covered in this article are three large-cap stocks with high earnings and revenue growth. On average, these three companies have market caps of $25B, and earnings and revenue growth rates of 70% and 83%, respectively.
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 one used for this analysis is the EPS growth of the projected current year vs. last year.
Revenue growth measures of how much more (or less) the company has sold during a specified time period compared with another period. The one used for this analysis is the trailing 12 months vs. the prior 12 months revenues. When looking at a company's financials, it is not enough to just look at the revenue for the current period. An investor wants to see how the company grows or improves over time and will give a much better idea of how well a company is doing.
Companies with high earnings and revenue growth rates tend to make good investments as they tend to perform better than the overall market.
1. LinkedIn (LNKD)
Internet Software & Services
This company has a P/E of 862.70, EPS Growth Rate of 80%, and a Revenue Growth Rate of 102%. LinkedIn Corporation operates an online professional network. The company, through its proprietary platform, allows members to create, manage, and share their professional identity online; build and engage with their professional networks; access shared knowledge and insights; and find business opportunities.
The company's platform also offers members with solutions, including applications and tools to search, connect, and communicate with business contacts, learn about career opportunities, join industry groups, research organizations, and share information.
Technically, the company has had a great run since the beginning of the year, but has been directionless for the past three months. The P/E of 862.70 is ridiculously high. I would stay away until I see some upward traction. Consider buying the stock when it can trade above $113.
2. VimpelCom (VIP)
Wireless Telecommunication Services
This company has a P/E of 27.28, EPS Growth Rate of 76%, and a Revenue Growth Rate of 68%. VimpelCom Ltd., a telecommunications service operator, provides voice and data services through a range of traditional and broadband mobile and fixed technologies. It provides its services under the Beeline, Kyivstar, djuice, banglalink, Mobilink, Telecel, Leo, Djezzy, Wind, and Infostrada brands.
The company also offers roaming services that allows its subscribers and the customers of other mobile operators to receive and make international, local, and long distance calls while outside of their home network. In addition, it provides mobile telecommunications, as well as fixed-line, data, and long distance licenses; and sells equipment and accessories.
Technically, it has done nothing, but been up since the middle of July. I think there is still legs in this name, but I would wait for further pullback before entering this trade.
3. Baidu, Inc. (BIDU)
Internet Software & Services
This company has a P/E of 32.04, EPS Growth Rate of 55%, and a Revenue Growth Rate of 80%. Baidu, Inc. provides Internet search services. The company offers a Chinese language search platform on its Website, Baidu.com; and a Japanese language search platform on its Website, Baidu.jp. Its search services enable users to find relevant information online, including Web pages, news, images, documents, and multimedia files through the links provided on its Websites.
The company also offers search products and Web directory; search-based community products; mobile search and related products; products and services for Websites and enterprises; e-commerce and entertainment products; and software and related search products.
Technically, after a nice run the stock is looking a bit weak with the past two sessions trading significantly lower. I like this stock, but I would be cautious on the entry here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.