5 Great Long-Term Growth Stocks
09/22/2011 9:30 am EST
Proven growth is getting harder to come by in the markets, but these five companies are shining exceptions to that challenge says Neil George of The Pay Me Strategy.
If a company is so successful in being a leader in an expanding industry, it can perform even if it re-invests more of its profits rather than paying you a bigger dividend.
But just because a company is successful at re-investing to provide growth in further business assets and revenues doesn’t guarantee that the market will pay attention. There are countless companies around the world that are solid and improving in their business values, but whose stock doesn’t perform in line with their improved fortunes.
Therefore it really doesn’t matter if management is great and the company is a global leader, if the stock market doesn’t deliver the returns to justify buying it without a bigger dividend.
This is why this collection of "Long Haulers" is very short and selective—the stock markets of the globe have little patience for even the best of businesses.
And with the recent series of gut-wrenching plunges and bounces in stock markets, investing for the long haul can be downright hazardous right now for your retirement.
Despite some of the recent price gyrations, the Long Haulers have been proving their mission by delivering not just positive performance, but solid gains that work with dividend stocks to offset inflationary threats and other pricing challenges for you own retirement expenses now and for the years to come.
Take Monsanto (MON), for example. The agricultural-technology company has more than delivered over the past year as the market has begun to catch up with its new mission to focus on seed technologies and higher-value-added chemicals.
The result is that—with soaring demand for more food and other crops, and limited acreage—Monsanto continues to build up sales and build up its business value.
And the stock market is recognizing it. Over the past year—including the recent market mayhem—Monsanto has delivered a return in excess of 24%, and there is a lot more to come from this in the year to come.
Other companies have had some setbacks near term with the massive market moves of recent weeks. But there is still the long-term proven track record of matching rising sales to the near lockstep performance of the stock.
Samsung is such a stock. With concerns over demand for consumer and industrial demands in the US and Europe, the stock has taking some hits recently.
But given that its markets are much broader than that of just the US or Europe—even if we do see anemic expansion in general terms—Samsung should still continue to provide offsetting sales gains in Latin America, Africa, and—most importantly—Asia.
So, for now, look at the recent price action as an opportunity to re-invest some of the cash into this long-term success company.
The German industrial giant is in a similar situation with Samsung, as concerns over US and European economic slowdowns have taken the stock down over the recent series of volatile trading.
But for the trailing year, the company’s stock has delivered a 12%-plus return, largely on the back of its solid customer bases in the still very-high-growth markets beyond the so-called first-tier economies of the US and Europe.
Keep buying Siemens—particularly in the current market price conditions.
China Mobile (CHL)
China is still the fastest-expanding economy and continues to see a ramp up in income and spending—not just in the higher-end of their wealthy population, but more importantly in their middle to lower classes.
This is why China Mobile—the workhorse phone company of the market—continues to get both broad business demand for its services, but also growth in the consumer markets. It’s a broad, nationwide base of continuing and renewing customers.
The share price has taken some hits. But for now, the proof for me is that the market has always caught up with the rising business values and revenue growth resulting in higher stock prices.
Last among what’s working is a new member of the Long Haulers that comes up from the farm team of the Nibblers.
The key for this company is that it is right in the sweet spot of what the private sector and the government wants—lower medical costs. The pharmacy manager continues to chomp down on costs, and in turn garners more and more of the market—resulting in massive sales gains.
And it’s plugged in to the government as well as business leaders, enabling it to expand not just on its own, but by buying out its lesser rivals. This, in turn, gives it the opportunity to expand in size and gives it greater efficiency.
Having proven itself, it should be bought in larger amounts over the coming months.