In terms of secular growth, Schweitzer-Mauduit benefits from a weak dollar, with 74% of sales coming from outside the US. Also, the company makes a more fire-safe paper that some states and countries require, which further boosts revenues. Meanwhile, the storage market’s expected 10% growth by 2012, the fastest-growing part being small to medium-sized storage, should mean more business for Compellent. Plus, the firm offers a number of applications that could save its customers as much as 50% on their cooling, power and floor-space needs. Cost savings never go out of style.
Both Schweitzer and Compellent recently have delivered earnings beats as well. On April 20, Schweitzer pre-announced earnings per share of 80 cents to 90 cents, which was much higher than the 40 cents expected. And Compellent surprised Wall Street by reporting 3 cents more per share than the consensus estimates and 54% year-over-year revenue growth.
There’s also a bit of Cramer’s UPOD here – underpromise, overdeliver. Despite the good earnings news, both companies kept their outlooks conservative. Schweitzer warned of declining cigarette consumption due to the recession, while Compellent went so far as to guide down, pointing to a potential slowdown in sales. Could this mean a repeat performance next quarter?
In the end, it’s the three key traits – niche, secular growth, earnings beats – that indicate a stock’s potential for the new-high list, Cramer said. Look for those, and you may have found a winner. But that may be tough in this market.
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