To get an idea of how mid cap stocks are doing in general, it can be helpful to look at companies from a variety of sectors and compare their data and patterns against one another. Today we pulled together a list of mid cap stocks that have two traits in common: profitability and significant growth projected for the next five years. Companies with these characteristics have a lot going for them. When strong profits are behind a company that is projected to grow, there is confidence that there is a carefully constructed strategy to foster and fund that growth. We think you will find it interesting to review the list of mid cap stocks we compiled.
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.
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.
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.
We first looked for mid cap stocks. We then looked for businesses that have expected earnings per share growth of more than 25 percent for the next five years (5-year projected EPS Growth Rate>25%). We then looked for companies with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). We did not screen out any sectors.
Do you think these mid-cap stocks will offer healthy returns? Use our screened list as a starting point for your own analysis.
1) HMS Holdings Corp. (HMSY)
|5-Year Projected Earnings Per Share Growth Rate||26.31%|
|Operating Profit Margin||20.49%|
|Earnings Per Share Growth Rate||16.37%|
HMS Holdings Corp. provides cost containment services to government and private healthcare payers and sponsors. The company's services include coordination of benefits and program integrity services. Its coordination of benefits services provide cost avoidance services that offer validated insurance coverage information, which is used by government-sponsored payers to coordinate benefits for incoming claims; and program integrity services identify improper payments on a pre-payment and post-payment basis, recover overpayments, detect and prevent fraud and abuse, and identify process improvements. The company also offers audit programs, program design, benefit management, and general and pharmacy systems consulting services. It serves state Medicaid agencies, the centers for Medicare and Medicaid services, Medicaid and Medicare managed care plans, government and private employers, pharmacy benefit managers, child support agencies, the Veterans Health Administration, commercial plans, and healthcare payors. HMS Holdings Corp. was founded in 1974 and is headquartered in New York, New York.
2) HDFC Bank Ltd. (HDB)
|Industry||Foreign Regional Banks|
|5-Year Projected Earnings Per Share Growth Rate||26.25%|
|Operating Profit Margin||42.71%|
|Earnings Per Share Growth Rate||20.05%|
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. As of March 31, 2012, the company operated a network of 2,544 branches and 8,913 ATMs in 1,399 cities. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India.
3) Jazz Pharmaceuticals plc (JAZZ)
|5-Year Projected Earnings Per Share Growth Rate||26.46%|
|Operating Profit Margin||35.15%|
|Earnings Per Share Growth Rate||221.11%|
Jazz Pharmaceuticals Public Limited Company, a specialty biopharmaceutical company, focuses on the identification, development, and commercialization of pharmaceutical products to meet unmet medical needs. Its marketed products include Xyrem, a sodium oxybate oral solution for the treatment of cataplexy and excessive daytime sleepiness in patients with narcolepsy; FazaClo (clozapine, USP) LD and FazaClo HD products, which are orally disintegrating clozapine tablets for the treatment of resistant schizophrenia; Luvox CR extended-release capsules for the treatment of obsessive compulsive disorder; and Prialt, a non-opioid intrathecal analgesic for refractory severe chronic pain. The company also offers women's health and other products, such as Elestrin for moderate-to-severe vasomotor symptoms associated with menopause; Natelle and Gesticare prescription prenatal vitamins; Urelle for irritative voiding, as well as for inflammation, hypermotility, and pain that accompany lower urinary tract infections; Gastrocrom oral concentrate for mastocytosis; Parcopa for idiopathic Parkinson's disease; and AVC (sulfanilamide) cream to treat vulvovaginitis caused by Candida albicans, as well as Niravam for the management of anxiety disorder or the short-term relief of symptoms of anxiety, as well as for panic disorder with or without agoraphobia. Its clinical development product candidates include Clozapine OS, an oral suspension formulation of clozapine; and Clozapine QD, a once-daily formulation of clozapine. The company was founded in 2003 and is headquartered in Dublin, Ireland.
4) SIRIUS XM Radio Inc. (SIRI)
|Industry||Broadcasting - Radio|
|5-Year Projected Earnings Per Share Growth Rate||25.20%|
|Operating Profit Margin||23.22%|
|Earnings Per Share Growth Rate||874.48%|
Sirius XM Radio Inc. provides satellite radio services in the United States and Canada. The company broadcasts approximately 135 channels, including music, sports, entertainment, comedy, talk, news, traffic, and weather channels on subscription fee basis through two satellite radio systems. It also offers music genres, such as rock, pop, and hip-hop, as well as dance, jazz, Latin, and classical music; advertising on non-music channels; and applications to allow consumers to access Internet services on mobile devices. In addition, the company sells satellite radios, components, and accessories; designs, establishes specifications, sources or specifies parts and components, and manages various aspects of the logistics and production of satellite and Internet radios; and licenses its technology to various electronics manufacturers to develop, manufacture, and distribute radios under various brands. Further, it provides music services for commercial establishments; satellite television services; Backseat TV, a service offering television content designed primarily for children in the backseat of vehicles; Travel Link, a suite of data services that include graphical weather, fuel prices, sports schedules and scores, and movie listings; and real-time traffic and weather services. The company's satellite radios are primarily distributed through automakers, retailers, and through its Website. As of December 31, 2011, it had 21,892,824 subscribers. The company was formerly known as Sirius Satellite Radio Inc. and changed its name to Sirius XM Radio Inc. in August 2008. Sirius XM Radio Inc. was founded in 1990 and is headquartered in New York, New York.
5) Air Lease Corporation (AL)
|Industry||Rental & Leasing Services|
|5-Year Projected Earnings Per Share Growth Rate||42.80%|
|Operating Profit Margin||30.63%|
|Earnings Per Share Growth Rate||171.91%|
Air Lease Corporation engages in the purchase and leasing of commercial aircraft to airlines worldwide. The company also provides fleet management and remarketing services, including leasing, re-leasing, lease management, and sales services to investors and/or owners of aircraft portfolios. As of December 31, 2011, it had a fleet of 102 aircraft comprising 81 single-aisle jet aircraft, 19 twin-aisle wide body aircraft, and two turboprop aircraft. The company was founded in 2010 and is based in Los Angeles, California.
6) Lululemon Athletica Inc. (LULU)
|Industry||Textile - Apparel Clothing|
|5-Year Projected Earnings Per Share Growth Rate||28.46%|
|Operating Profit Margin||28.04%|
|Earnings Per Share Growth Rate||49.59%|
Lululemon athletica inc., together with its subsidiaries, designs, manufactures, and distributes athletic apparel for women, men, and female youth. The company's line of apparel and accessories include fitness pants, shorts, tops, and jackets for healthy lifestyle activities, such as yoga, running, and general fitness. Its fitness-related accessories comprise bags, socks, underwear, yoga mats, instructional yoga DVDs, and water bottles. The company sells its products through a chain of corporate-owned and franchise stores; direct to consumer through e-commerce; and a network of wholesale channel, such as yoga studios, health clubs, and fitness centers. As of January 29, 2012, it had 47 stores in Canada, 108 stores in the United States, 18 stores in Australia, and one store in New Zealand under the Lululemon Athletica and Ivivva Athletica brand names. Lululemon Athletica inc. was founded in 1998 and is based in Vancouver, Canada.
7) Kodiak Oil & Gas Corp. (KOG)
|Industry||Oil & Gas Drilling & Exploration|
|5-Year Projected Earnings Per Share Growth Rate||50.00%|
|Operating Profit Margin||33.79%|
|Earnings Per Share Growth Rate||205.75%|
Kodiak Oil & Gas Corp. engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas in the United States. The company's oil and natural gas reserves and operations are primarily concentrated in the Williston Basin of North Dakota and Montana, and the Green River Basin of Wyoming and Colorado. As of December 31, 2011, it had estimated proved reserves of 35.6 million barrels of oil and 25.5 billion cubic feet of natural gas. The company was formerly known as Columbia Copper Company Ltd. and changed its name to Kodiak Oil & Gas Corp. in September 2001. Kodiak Oil & Gas Corp. was incorporated in 1972 and is headquartered in Denver, Colorado.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/28/2012.