Companies at the mid-cap level have less to prove than their smaller sized peers, which can entice investors who prefer greater protection from risk. Yet some growth investors believe that mid caps have already peaked. For our list today we wanted to find stocks that appear to be holding the balance between risk reduction and room for growth. We ran a scan to find mid-cap stocks that are highly profitable and have projected EPS growth rates far above 25% for the coming year. Together, these traits point to companies that have honed profit generation by maximizing efficiency and appear to be on track for significant expansion. If you like mid-cap stocks with these qualities, then you will be interested in the list below.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. 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.
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
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.
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 next year (1-year projected EPS Growth Rate>25%). We then looked for companies that have been able to retain strong profit margins on the bottom line (Net Margin [TTM]>10%) (1-year operating margin>15%). We did not screen out any sectors.
Do you think these mid-cap stocks should have higher valuations? Use our list to help with your own analysis.
1) DuPont Fabros Technology, Inc. (NYSE:DFT)
|1-Year Projected Earnings Per Share Growth Rate||119.57%|
|Operating Profit Margin||35.52%|
DuPont Fabros Technology, Inc., a real estate investment trust (REIT), engages in the ownership, acquisition, development, operation, management and lease of large-scale data center facilities in the United States. The company leases its data centers to the American and international technology companies to house, power and cool the computer servers that support their critical business processes. It also provides certain technical services to tenants, including layout design and installation of electrical power circuits, data cabling, server cabinets and racks, computer room airflow analyses and monitoring. As of December 31, 2011, the company owned and operated seven data centers located in Northern Virginia; one data center in suburban Chicago, Illinois; one data center in Piscataway, New Jersey; one data center in Santa Clara, California. DuPont Fabros Technology, Inc. has elected to be taxed as a REIT. As a REIT, it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2007 and its headquarters is in Washington, District of Columbia.
2) American Campus Communities Inc. (NYSE:ACC)
|Industry||REIT - Residential|
|1-Year Projected Earnings Per Share Growth Rate||92.19%|
|Operating Profit Margin||25.54%|
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. The firm diversifies its functions across acquisition, design, financing, development, construction management, leasing and management of student housing properties. American Campus Communities, Inc. was formed in 1993 and is based in Austin, Texas.
3) Laredo Petroleum Holdings, Inc. (NYSE:LPI)
|Industry||Independent Oil & Gas|
|1-Year Projected Earnings Per Share Growth Rate||68.00%|
|Operating Profit Margin||33.47%|
Laredo Petroleum Holdings, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of oil and natural gas in the Permian and Mid-Continent regions of the United States. The company's principal properties include the Permian Basin covering an area of 134,680 net acres in approximately 300 sections in the Wolfberry and deeper horizons located in west Texas and southeastern New Mexico; and the Anadarko Granite Wash property comprising 37,850 net acres situated in the Texas Panhandle and Western Oklahoma. As of December 31, 2011, its total estimated proved oil and natural gas reserves were 156.5 million barrels of oil equivalent. The company also drilled 29 gross horizontal wells in the Permian Basin and 12 gross horizontal wells in the Anadarko Granite Wash. Laredo Petroleum Holdings, Inc. was founded in 2006 and its headquarters is in Tulsa, Oklahoma.
4) New Gold, Inc. (NYSEMKT:NGD)
|1-Year Projected Earnings Per Share Growth Rate||70.45%|
|Operating Profit Margin||31.99%|
New Gold Inc., a gold mining company, engages in the acquisition, exploration, extraction, processing and reclamation of mineral properties. It primarily explore for gold, silver, and copper deposits. The company's operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. It also has development projects, including the New Afton copper‐gold project in Canada; Blackwater exploration project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. In addition, the company owns interests in the Auro Properties, which include two claim blocks immediately to the southeast of the Blackwater Project. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is based in Vancouver, Canada.
5) Noble Corp. (NYSE:NE)
|Industry||Oil & Gas Drilling & Exploration|
|1-Year Projected Earnings Per Share Growth Rate||74.32%|
|Operating Profit Margin||22.39%|
Noble Corporation operates as an offshore drilling contractor for the oil and gas industry. The company offers contract drilling services for oil and gas wells. Its drilling fleet consists of 14 semisubmersibles, 14 drillships, 49 jackups, and 2 submersibles, as well as 11 units under construction, including 5 ultra-deepwater, harsh environment drillships and 6 heavy-duty, harsh environment jackup rigs. The company also provides services for drilling and workover activities; and undertakes refurbishment projects for rigs, as well as offers personnel necessary to manage and perform the drilling operations from a drilling platform owned by the operator. It conducts its contract drilling operations principally in the United States, Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, west Africa, the Middle East, India, and the Asian Pacific. The company was founded in 1921 and is based in Baar, Switzerland.
6) Companhia Siderurgica Nacional (NYSE:SID)
|Industry||Steel & Iron|
|1-Year Projected Earnings Per Share Growth Rate||384.60%|
|Operating Profit Margin||29.09%|
Companhia Siderurgica Nacional primarily operates as an integrated steel producer in Brazil and Latin America. The company principally produces carbon steel and various steel products. Its products include slabs, which are semi-finished products used for processing hot-rolled, cold-rolled, or coated coils and sheet products. The company also offers tin mill products, which consist of flat-rolled low-carbon steel coils or sheets, such as tin plate, tin free steel, low tin coated steel, and black plate products. In addition, it engages in mining business by owning iron ore, limestone, dolomite, and tin mines comprising the Namisa property, Casa de Pedra mine, Arcos mine, and Santa Barbara mine; and involves in logistics business that includes railway and port facilities. Further, the company produces and sells cement; and engages in the generation of power plants. It sells its steel products as a raw material for various manufacturing industries, including the automotive, home appliance, packaging, construction, and steel processing industries. The company offers its products to customers directly through its sales force, as well as through distributors for subsequent resale. It also exports its products to Europe, Latin America, Asia, and North America. Companhia Siderurgica Nacional was founded in 1941 and its headquarters is in Sao Paulo, Brazil.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/17/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.