5 Stocks Poised for Growth in the Coming Year
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Investor activity can make a stock price jump like nothing else, and with a bullish start to the year, several companies are making headlines. In my analysis of the current market I noticed five stocks, ranging from manufacturing to technology that are stirring up investor activity, sparking interest, and making headlines in 2012. In the following article I discuss why I believe these five stocks are poised for positive growth in the coming quarters.
Goodrich Corporation (NYSE: GR) is a 140 year old Fortune 500 company and a leading worldwide supplier to the aircraft industry. If there’s an aircraft in the air, it’s likely that a Goodrich product is flying with it. Goodrich Corporation has benefited from the growth in the aviation industry, particularly clients such as Boeing and Airbus from which Goodrich Corporation gets about 34% of its annual business. In the last two years, Goodrich Corporation has gone on a shopping spree, taking over Crompton Technology Group, Ltd. (CTG), the cabin management assets of DeCrane Holdings Co., Microtecnica, and most recently Winslow Marine Products Corporation.
In terms of valuations, the price earnings ratio of 22.10 is well above the industry average. The company currently has a high price to free cash ratio of 26.26. The stock is a bit expensive currently trading around $124, right at its 52 week high of $124.64, however, few others can boast a 17% growth in sales for the second quarter 2011, and a near repeat 16.30% for the third quarter, with a dividend payout ratio of 21% and dividend yield at 1.16.
Bristol-Myers Squibb Company (NYSE: BMY) is a global pharmaceutical giant, manufacturing products in eight major countries including the U.S. and Puerto Rico. The company has a special focus on cardiovascular disease, mental illness, cancer, HIV/AIDS and hepatitis B and C. Bristol-Myers Squibb’s volumes took a huge leap from just 11 million in September 2011 to 23 million in the first week of October, suggesting major investor interest.
Currently trading at $32, near the high of the 52 week range of $24.97 and $35.44, Bristol-Myers Squibb has a higher operating margin than most of its peers, such as Pfizer (PFE) and Abbott Laboratories (ABT), at 33.04%, and quarterly revenue growth (year on year basis) of 11.40%. A $54.52 billion market capitalization company with a better than industry leading dividend payout of 51% and return on equity of over 30.17%, Bristol-Myer Squibb is a serious contender in the global pharmaceutical industry.
Range Resources Corporation (NYSE: RRC) has one of the lowest break even costs in the industry around $2.50 per mcfe (thousand cubic feet equivalent) of natural gas, according to my calculations, and is therefore one of the leading oil and natural gas exploration companies. Range Resources boasts reserves of 4.4 trillion cubic feet, and has been trading with huge volumes lately, especially in September 2011 when volumes rose to 16 million. The stock is currently trading around $57 at the time of writing, well above its yearly low of $46.18. This is not surprising, considering how many people are chasing this stock.
Range Resources ended the third quarter of 2011 with its strongest balance sheet in its history of operations. Range Resources had $51.88 million in total cash on its balance sheet with a current ratio of .72. Management expects a turnaround this fiscal year from the previous year’s negative ROI of 6%, based on a production increase of 8% on a year on year basis.
Apple Inc. (NASDAQ: AAPL) has gone from a company with headquarters in the founder’s garage to becoming the most valuable company in the world, with more cash than the U.S. Treasury, according to its daily statement issued in July 2011. Apple develops and sells a wide range of personal computers, media devices, mobile devices and portable digital music players such as the iPod, iPad and iPhone, having sold over 20 million units in the second quarter of 2011 alone.
Apple has steadily increased its earnings per share in the last ten quarters, registering a quarterly growth of 39%, a huge cash balance and return on equity of 41.67%, compared to the industry average of 13%. The stock is currently trading around $445, towards the high end of the 52 week range of $310.50 and $454.45, moving above the 50 and 200 day moving averages, all of which point an upward trend. Even though the stock was teetering at the end of 2011 from the loss of the irreplaceable Steve Jobs, I predict Apple will climb into new territory with the news that it overtook ExxonMobil as the most valuable traded company in the world.
Amazon Inc. (NASDAQ: AMZN), founded in 1994, is the world’s foremost online megastore and brainchild of Jeff Bezos. International sales jumped over 50% in 2011, taking its share to about nearly half, at 45% of total revenues. Once the online retailer of books, you can find virtually anything from socks to hard to find collectibles on amazon.com, with a special retail channel from third party sellers.
Over the last 12 quarters, Amazon has seen its revenues boom. Most recently, quarterly revenue growth was at 43.90%, bringing current revenue to $43.59 billion. This is likely due to an increase in online traffic from developing regions, such as China and Asia-Pacific. Amazon is currently trading around $194, near its 52 week high of $246.71, with a towering P/E ratio of 102.40. With a strong performance throughout the holiday season, Kindle Fire added significantly to Amazon’s revenues.
I believe the above mentioned stocks present a good value, even at current trading prices. Deeply rooted in their industries, these companies have shown solid fundamentals and show strong growth potential.
Motley Fool newsletter services recommend Apple, Amazon.com and Range Resources. The Motley Fool owns shares of Apple and Amazon.com. Vatalyst has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.