10 Large-Caps With Fastest Sales Growth
Investors concerned about a double-dip can shield themselves with large-cap companies that have global reach and ample cash to withstand a slowdown.
The following 10 companies increased sales at an annualized rate of at least 34% in the past three years, which were marked by the worst business contraction since the Great Depression. They are ordered by growth rate, from fast to fastest.
10. Freeport-McMoRan explores for copper and gold. Since 2007, it has expanded sales 34% a year. First-quarter revenue soared 68% and net profit multiplied to $945 million, or $2 a share, from $103 million, or 11 cents, a year earlier. The operating margin extended to 47% from 27%. Freeport's stock has risen 35% during the past 12 months, outpacing indices. It trades at a PEG ratio, a measure of value relative to predicted long-run growth, of 0.2, signaling an 80% discount to estimated fair value.
9.Salesforce.com designs software to help companies manage customer and sales relationships. During the past three years, it has grown revenue 35% annually, on average. Fiscal first-quarter net income declined 3.8%, to $18 million, or 13 cents a share, as revenue gained 24%. The operating margin narrowed to 8.8% from 9.9%. The company completed its acquisition of Jigsaw Data on May 10. Salesforce trades at a premium to software peers based on all valuation measures. Still, analysts are bullish on the stock, with 65% rating it "buy."
8.CenturyLink , formerly CenturyTel, is an integrated telecom company focused on rural areas and midsized cities. The company was created through the merger of CenturyTel and Embarq last year. In April, management announced a stock-for-stock merger with Qwest(Q). Assuming deal approval, the new entity will be the third-largest U.S. telecom company. CenturyLink has grown sales 36% a year since 2007, inorganically. Its stock sells for a forward earnings multiple of 11, a 24% discount to its peer average, and pays a dividend yield of 8.3%.
7.Republic Services collects and disposes of waste. It merged with Allied Waste in 2008. During the past three years, Republic has boosted revenue 38% annually, on average, helped by the merger. Republic is scheduled to release second-quarter results July 28. First-quarter profit tumbled 42%, to $65 million, or 17 cents a share, as revenue declined 5%. The operating margin remained steady at 20%. Republic shares sell for a PEG ratio of 0.9, a 10% discount to fair value. Researchers are bullish on the stock, with 91% rating it "buy."
6. IntercontinentalExchange operates futures exchanges, over-the-counter markets and derivatives clearing houses. Since 2007, it has grown sales 39% a year. First-quarter profit advanced 40%, to $101 million, or $1.36 a share, as revenue jumped 22%. Its stock trades at a price-to-projected-earnings ratio of 17, a 14% premium to the financial services industry average. Roughly 55% of analysts covering the stock rank it a "buy." UBS(UBS) offers a target of $143 and Stifel Financial(SF) values the stock at $140, both implying a return of more than 30%.
More stocks to pick
5.Southwestern Energy is an independent energy company, exploring for natural gas and crude oil in the U.S. During the past three years, it has expanded revenue 40% annually, on average. Its stock returned 20% a year over that span. Southwestern swung to a first-quarter profit of $172 million, or 49 cents a share, from a loss of $433 million, or $1.26, a year earlier. Revenue rose 24%. The shares trade at a premium to oil and gas peers based on projected earnings, book value and cash flow. They offer a superior performance record.
4.Celgene develops therapies for cancer and immune-inflammatory diseases. Since 2007, it has boosted sales 42% a year. But its stock declined 5% a year over the same period. Celgene is due to release second-quarter results July 28. First-quarter profit gained 44%, to $234 million, or 50 cents a share, as revenue increased 31%. The operating margin extended to 35% from 27%. Celgene trades at a PEG ratio of 0.5, a 50% discount to fair value. Of analysts covering the stock, 96% rate it "buy." A median target of $71.80 reflects an expected return of 37%.
3.Life Technologies , like Celgene, is a top biotech company. However, Life Technologies designs and sells the tools researchers use for drug discovery. During the past three years, the company has grown revenue 42% annually, on average. Its stock returned 6.9% a year over that span. Life is expected to report its second-quarter performance July 29. First-quarter profit sextupled to $92 million, or 48 cents a share, as revenue climbed 14%. The stock sells for a PEG ratio of 0.1, a 90% discount to fair value. Roughly 88% of researchers covering the stock rank it "buy."
2.Intuitive Surgical sells the da Vinci systems, which are used for complex surgeries. Since 2007, it has expanded sales 43% a year. Its stock advanced 29% a year over the same time frame, beating indices. Intuitive will release second-quarter results July 21. First-quarter profit tripled to $85 million, or $2.12 a share, as revenue surged 74%. The operating margin stretched to 39% from 24%. Its stock trades at a PEG ratio of 1, at parity with fair value. Just 33% of analysts rate it "buy." Last quarter, Intuitive beat analysts' profit consensus by 24%.
1. Discovery Communications provides television programming worldwide, most notably on the Discovery Channel and Animal Planet. During the past three years, it has grown revenue 88% annually, on average. Its stock dropped 9% a year over that span. Discovery is scheduled to release second-quarter numbers Aug. 3. Its stock sells for a PEG ratio of 0.8, a 20% discount to fair value. Roughly 72% of analysts covering Discovery's stock rate it "buy." A median target of $42.47 suggests 16% of upside.
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where's the US Dollar Today?
- Track Treasury Prices Here
Disclosure information was not available for Jake Lynch or his company.