Loading...

Growth stocks generally represent companies that can expand their earnings consistently over time, reflecting their limited sensitivity to cyclical changes in the overall economy. To calculate the growth rates of these companies, we measured five parameters (sales, cash flow, earnings, dividends, and book value) combined.  We are interested in finding those companies that are expected to exhibit the highest growth rates over a 3- to 5-year investment horizon.  Consequently, these equities tend to be most suitable for risk-tolerant investors seeking capital gains over the intermediate term, rather than conservative investors who would be more comfortable with a total return objective (a combination of income and capital appreciation).  So, while this screen compiled a list of stocks with high growth rates as its only criterion, investors may want to incorporate additional measures, such as valuation metrics like price to earnings or price to sales ratios, before making a final investment decision.

In this screen, we looked for stocks trading above $5.00 a share with high expected growth rates over the coming 3 to 5 years. Here are some of the highlights:

Green Mountain Coffee Roasters Inc. (GMCR) operates in the specialty coffee industry.  It roasts, packages, and distributes the roasted coffee under the Green Mountain Coffee Roasters, Timothy, and Newman’s Own Organic brands.  The company also sells Keurig brewing machines.

DeVry Inc. (DV) provides career-focused, post-secondary education.  Programs include the Keller School of Management, Ross University medical and veterinary schools, Chamberlain College of Nursing, and the CPA and CFA test prep courses under the Becker and Stalla brands.

Apple Inc. (AAPL) is a major developer, manufacturer, and marketer of personal computers and peripheral and consumer products, such as the iPod digital music player, the iPhone, and the iPad tablet computer.  The company also sells operating systems and developer tools, and operates retail outlets.

Express Scripts, Inc. (ESRX) is one of the largest pharmacy benefit managers in North America.  It provides retail drug card programs, specialty disease management, and prescription drugs through its retail network.  It also provides biopharmaceutical products directly to patients and physicians.

Jarden Corp. (JAH) makes and sells niche consumer products.  Brands include: Ball, Coleman, First Alert, Kerr, Lehigh, Pine Mountain, Bionare, Crock-Pot, FoodSaver, Mr. Coffee, Oster, Rival, Seal-a-Meal, and Sunbeam.  Outdoor-related products accounted for about 45% of total sales in 2009.

The table below lists the top ten results of our screen (including the five we highlighted above), ranked by estimated growth rates over the next 3 to 5 years.  All data are as of 6/10/10.

Company

Ticker

Stock Price  ($)     

Market Cap  ($ Mil)

Growth Rate (%)

Green Mtn. Coffee

GMCR 

23.62

3,108

30

DeVry

DV 

55.38

3,945

21

Apple

AAPL 

245.92

223,772

20

Express Scripts

ESRX 

52.10

28,556

18

Jarden

JAH 

28.50

2,628

18

Cognizant Technology

CTSH 

50.57

15,142

18

ITT Educational

ESI 

95.55

3,300

18

Research in Motion

RIMM 

58.18

32,425

18

Atlantic Tele-Network

ATNI 

41.40

633

17

Strayer Education

STRA 

250.31

3,482

17