In a perfect world, companies would grow at a steady pace that allowed them to always meet the demand and have strong sources of funding to fuel the growth. But we know that doesn't happen most of the time. There are growth spurts and dry funding spells. When this happens, leveraging the company's assets can be a useful way to bridge the gap until things even out. Of course, too much debt tends to hinder growth in the long term. For our screen today we looked for financial stocks that have little long term debt and have EPS growth rates above 25% for the next five years. These two traits create a healthy environment for growth to flourish at a manageable rate. Take a look at the financial stocks listed below to see if they meet your standards.
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 Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
We first looked for financial stocks. We then screened for businesses with estimated high-growth, with 5-year projected EPS growth above 25%. We then looked for companies that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). From here, we then looked for companies that operate with little to no debt (D/E Ratio<.1). We did not screen out any market caps.
Do you think these stocks are in strong positions for future growth? Use this list as a starting-off point for your own analysis.
1) Noah Holdings Limited (NOAH)
|5-Year Projected Earnings Per Share Growth Rate||33.10%|
|Long Term Debt/Equity Ratio||0.00|
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. It serves high net worth individuals; enterprises affiliated with high net worth individuals; and wholesale clients, primarily local commercial banks or branches of national commercial banks that distribute wealth management products to their own clients. The company was incorporated in 2007 and is headquartered in Shanghai, China.
2) Harris & Harris Group, Inc. (TINY)
|5-Year Projected Earnings Per Share Growth Rate||30.00%|
|Long Term Debt/Equity Ratio||0.01|
Harris & Harris Group, Inc. is a venture capital firm specializing in early stage investments. It is a BDC. The firm seeks to invest in tiny technology including microsystems and transformative nanotechnology companies and applications in the cleantech, energy, healthcare and electronic sectors. It seeks companies which employ or intend to employ technology that is at the microscale or smaller and if the employment of that technology is material to its business plan. The firm may make follow-on investments and seeks to coinvest. It prefers to hold membership on boards of directors or serve as observers to the boards of directors on its portfolio companies. Harris & Harris Group, Inc. was founded in August 1981 and is based in New York, New York with additional offices in Palo Alto, California and Los Angeles, California.
3) Cninsure Inc. (CISG)
|5-Year Projected Earnings Per Share Growth Rate||33.90%|
|Long Term Debt/Equity Ratio||0.00|
CNinsure Inc., an insurance intermediary company, provides insurance brokerage and agency, and insurance claims adjusting services in the People's Republic of China. The company distributes property and casualty, and life insurance products underwritten by various insurance companies. It sells automobile insurance, individual accident insurance, and homeowner insurance products primarily to individual customers; commercial property insurance, cargo insurance, hull insurance, liability insurance, and construction insurance products to institutional customers; and life insurance products, including individual whole life insurance, term life insurance, endowment life insurance, education annuity, and health insurance, as well as universal insurance and group life insurance primarily to individuals under 50 years of age.
As of April 8, 2011, its distribution and service network consisted of 39 insurance agencies, 3 insurance brokerages, 3 claims adjusting firms, and 1 online insurance service company, with 533 sales and service outlets, 45,914 registered sales agents, 124 in-house sales representatives, and 1,367 in-house claims adjustors. The company was founded in 1998 and is headquartered in Guangzhou, the People's Republic of China.
4) E-House Holdings Limited (EJ)
|5-Year Projected Earnings Per Share Growth Rate||32.71%|
|Long Term Debt/Equity Ratio||0.00|
E-House Holdings Limited, through its subsidiaries, operates as a real estate services company in China. The company offers primary real estate agency services; real estate information services, such as data subscription and data integration services; and real estate consulting services comprising land acquisition consulting, development consulting, marketing consulting, and comprehensive solution consulting services.
Its secondary real estate brokerage services include offering advisory services on choices of properties; accompanying potential buyers on house viewing trips; drafting purchase contracts; negotiating price and other terms; and providing preliminary proof of title, as well as coordinating with the notary, the bank, and the title transfer agency services. It primarily serves real estate developers. E-House Holdings Limited was founded in 2000 and is headquartered in Shanghai, the People's Republic of China.
5) The Edelman Financial Group, Inc. (EF)
|5-Year Projected Earnings Per Share Growth Rate||37.50%|
|Long Term Debt/Equity Ratio||0.07|
The Edelman Financial Group Inc., through its subsidiaries, provides wealth management services primarily to individuals, corporations, and financial institutions in North America. The company's Mass Affluent segment provides investment advisory, wealth and investment management, and financial planning services to individual clients; financial planning and asset management services for small or mid-size organizations; and 401(k) benefit plan consultation services for employers.
The Edelman Financial Group Inc.'s Other Wealth Management segment provides investment management services primarily to high net worth individuals and institutions through branch offices and broker-dealers, as well as through affiliated wealth managers and registered investment advisors. Its services include investment strategies and alternatives, tax efficient estate and financial planning, trusts, agent/fiduciary investment management services, and private client brokerage services. The company was formerly known as Sanders Morris Harris Group Inc. and changed its name to The Edelman Financial Group Inc. in May 2011. The Edelman Financial Group Inc. was founded in 1987 and is based in Houston, Texas.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.