Watch the 5 Top Revenue Growers
04/15/2013 9:30 am EST
These companies have grown their sales faster than any of the other S&P 500 businesses, says Ben Gersten of Money Morning.
One of the best indicators that a company will have future growth is the strength of its top-line number—revenue. Growing revenue gives companies more access to capital, enabling them to reinvest in their business and reward shareholders through returns and dividends.
On the other hand, if a company struggles to generate sales, it's often a good reason to dump a stock. That's why we've gone through the S&P 500 to bring you the fastest-growing companies based on last quarter's year-over-year sales growth.
In the past two years, our experts at Money Morning have recommended four of the five top performers:
1. McGraw-Hill (MHP)
Last quarter, the New York City-based publisher saw its sales grow at a whopping 254% year-over-year. The company serves its customers through four segments: S&P Ratings, S&P Capital IQ/S&P Indices, Commodities & Commercial, and McGraw-Hill Education.
Shah Gilani recommended this company back in October 2011, when it was trading around $43. The stock has moved up as much as 36.3% since the recommendation, and it pays a dividend of 2.15%—which will likely increase, as it has for 40 consecutive years.
2. H&R Block (HRB)
It's tax season, and millions of Americans scrambling to file their taxes means more profits for H&R Block. Preparing taxes helped H&R post sales growth of almost 244% last quarter and its stock has taken off this year. It's up 57.5% year-to-date.
Martin Hutchinson recommended the stock in October 2012 as his top stock to buy if President Obama won re-election. Since that call, it's soared 75.4%.
In addition, HRB has paid dividends for 50 consecutive years, and investors could see the 2.75% dividend increased again. Before HRB's recent run, it was yielding more than 4.5%.
3. Pentair (PNR)
Pentair, which makes water pumps and filters, had sales growth of 102% last quarter. Along with pumps ranging from residential models to the world's largest flood-control pumps, Pentair also makes irrigation and crop-spray equipment. The company's filters and sanitizers produce clean drinking water, and are also used in pools and spas.
PNR was recommended by Keith Fitz-Gerald in August 2011, when the stock was trading near $31. It currently has a very satisfying gain of 67%. Plus, it offers a 1.8% dividend.
4. AGL Resources (GAS)
The nation's largest natural gas-only utility posted 98.37% sales growth last quarter. The company delivers gas to clients in Georgia, Florida, Maryland, New Jersey, Tennessee, Illinois, and Virginia, serving more than 4.5 million customers.
Of the five stocks on this list, GAS might offer investors the most upside, as the price of natural gas continues to move up.
Peter Krauth first recommended this company back in August 2011, when the stock was trading around $37.50. The stock is up 12% since then, and pays a hefty 4.5% dividend as well.
5. Prudential Financial (PRU)
The financial services giant's sales soared 249% in the last quarter. Prudential offers a wide range of financial products, including life insurance, annuities, retirement-related services, mutual funds, and investment management.
It pays a dividend of 2.71%, but since coming back from the market lows of 2009, its stock is down 5% in the past three years.