A Six-Pack for Growth and Value

12/04/2014 7:00 am EST


Stephen Quickel

Editor, US Investment Report

We don’t try to predict the market’s swings. Our forte is stock picking, along with a portfolio strategy that emphasizes concentration in a limited number of rapid growth stocks, explains Stephen Quickel, editor of US Investment Report.

If pressed for a market opinion, however, we are bullish about stocks for the coming six to 12 months, given the strength of the US economy, the expected growth of corporate earnings (which drive share prices), and the comparatively modest price valuations of leading growth stocks.

Among the new stocks being added to our Recommended List are three established large-caps and three small-caps offering rapid earnings growth.

Their average forward P/E is just over 16; their average PEG ratio is a very attractive 0.82. Here is what we like most about them:

AmSurg Corp. (AMSG)

Tennessee-based AmSurg operates 240 ambulatory surgery centers for use by its partner physicians. After great third-quarter earnings, ten analysts raised their earnings estimates, with five-year growth that is expected to average 22.5% a year.

CaesarStone Sdot-Yam Ltd. (CSTE)

Located on an Israeli kibbutz, CSTE makes engineered quartz surfaces for countertops, wall panels, and other construction applications. Expected earnings growth is 24% a year, producing an attractive 0.91 PEG ratio.

Kadant (KAI)

The smallest of our new stocks, this Westford, MA small-cap sells its papermaking and paper recycling equipment worldwide. Its 11.5 P/E and 0.58 PEG are quite modest. A solid buy as it breaks above $41 and heads for $51.

Harmon International Industries (HAR)

A leading maker of consumer audio products that’s been expanding rapidly by acquisitions. Its oversold stock is now back above its moving averages with 17% annual earnings growth expected.

Time Warner (TWX)

This media and entertainment giant, ranging from TV and films to publishing, is slated to grow earnings 19% a year. It shares are now a bit off their 52-week high with an attractive 0.88 PEG.

Twenty First Century Fox (FOXA)

The Class A stock of another diversified global media and entertainment giant.

It keeps finding support at its 10-week moving average, trades at moderate valuations and is rated Strong Buy by 12 of 15 analysts. A break above $36 could take it to $45.

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