WHAT ARE WE LOOKING FOR?
The best U.S. growth stocks.
MORE ABOUT TODAY'S SCREEN
We'll continue with yesterday's screen but switch to U.S.-listed stocks today. Yesterday we looked for Canadian stocks with 10 per cent expected earnings and revenue growth for this year and next. We came up with 15 companies that passed the test. With a much larger market, we can increase our threshold to 20 per cent for U.S stocks.
To repeat yesterday: We're looking not only for stocks that are expected to grow by leaps and bounds next year, but also showed growth this year. By also screening for revenue growth, we make sure we find companies that are in a growing business and not simply showing better profits through cost-cutting.
WHAT DID WE FIND?
We found 19 companies that passed the test. Canadian miner Agnico Eagle leads both lists, which sounds like a great opportunity but let's take a closer look.
First, growth investors rarely consider mining companies as growth companies. That's because growth for miners often comes in big waves as new mines come on stream. That's the case with Agnico as it provided an operational update to analysts recently.
"[The guidance is for]more than 100-per-cent increase over 2009 production estimates as all of the AEM's six gold mines are scheduled to be in commercial production," UBS analyst Brian MacArthur wrote in a research note Friday. "Cash cost guidance was higher that our expectations and was up considerably year over year primarily due to updated base-case assumptions that include significantly stronger Canadian dollar and Euro exchange rates versus the U.S. dollar."
This forced him to cut his earnings and net asset valuation estimates and led him to reduce his target price for the stock, based on the new NAV, to $68 (U.S.) from $79, while keeping it a "buy."
Scott Adams