There’s a scene in Forrest Gump where Forrest discovers that his money troubles are over because his partner, Lieutenant Dan, has invested in “some sort of fruit company,” which is a reference to Apple (AAPL). The scene, funny as it is, speaks to the dream that seems to follow most investors: getting in on a growing company and then sitting back and watching the returns roll in. Most families have a story passed down through the ages about how Great Great Great Grandpappy Zeke was in Atlanta in 19-aught-7 and could have gotten in on the ground floor of Coca Cola (KO) for just $500. Alas.
However, while the sort of vision and foresight required to find those companies destined for returns like Apple or Coke is more often than not a mirage, that doesn’t mean that investors shouldn’t ignore the potential for sustained growth. So in hopes of finding that stock that will just keep growing and growing the longer one holds it, here’s a list of the top five stocks that have shown solid growth in recent years and look to continue the trend. Each of these companies has shown sales growth of over 25 percent over the last five years, EPS growth exceeding 25 percent over the last five years, and have EPS growth that’s projected to be higher than 25 percent next year and over the next five years. Guidance can be (and often is) wrong, and past performance is by no means a reliable indicator of future performance, but the combination of these factors could mean that these five companies are headed somewhere.
Baidu.com, Inc. (BIDU)
If people in Forrest Gump’s era struggled to understand how a company like Apple could rise to be the second largest in the world by market capitalization, getting them on board with Baidu.com would be nye impossible. However, Baidu, a Chinese search engine offering services very similar to Google (GOOG) or Wikipedia, has shown solid growth over time. Share value is up almost 900 percent over the last five years, and the expansive potential of the growing middle class in China appears to be one that Baidu could tap into. Baidu has shown EPS growth exceeding 130 percent over the last five years and, while it looks to slow down, the company is projected to continue showing consistent profits.
Goldcorp Inc. (GG)
What says growth like Canada, right? They’ve got the room. Well, Goldcorp has been steadily growing for the last five years and appears poised to continue expanding its revenues in the future. What’s more, with a PEG of just 0.45, it appears that the stock is available at a relative bargain. The company’s shares have gained over 75 percent over the last five years and, should it continue to show profits, it’s possible that those plucky Canadians will just keep showing solid returns.
Concho Resources Inc. (CXO)
Concho is an oil and gas drilling exploration company company which operates primarily in the Permiam Basin of West Texas and Southeast New Mexico. The company appears to be benefitting from the oil and gas renaissance in the United States as EPS growth over the last five years has been over 50 percent and is projected to stay very close to that level over the next five years. With shares up almost 700 percent over the last half-decade, Concho could be a solid pick for sustaining growth into the future.
Lululemon Athletica inc. (LULU)
Lululemon Athletics is a Canadian company making athletic equipment. Last year was a good one to the designer and retailers, with share prices leaping over 50 percent since January of 2011. This is most likely due to the extremely consistent EPS growth the company has enjoyed for half a decade now. Since 2007, Lululemon has seen its EPS shoot up some 140 percent.
Green Mountain Coffee Roasters (GMCR)
Okay, so David Einhorn clearly disagrees, something that also might speak to the hazards of looking only at growth when scouting potential investments. But Green Mountain didn’t become a battleground stock for nothing, the company’s K-cups have proven extremely profitable over time, allowing for EPS growth of over 75 percent for the last five years and projections of EPS growth exceeding 60 percent over the next five years.
*Data is from finviz.com.