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Thursday March 11, 2010
Consumer, health & tech
by Stephen Quickel, editor The US Investment Report
Here are some of the stock in these sectors that we are targeting in measured amounts (leaving 20% to 30% cash reserves) in order to diversify and strengthen the model portfolios. 
Big Lots Inc. (NYSE: BIG), a close-out discount retailer based in Columbus, OH, is a first-timer on our list. Operating through nearly 1,500 stores in the US, Puerto Rico and Guam, its products cover a broad spectrum of consumables, home and garden products, toys, jewelry and apparel. Thirteen analysts covering BIG (ten rating it a strong buy) project 13% a year earnings growth in the next 3 to 5 years, according to Zacks Invest Research, which gives it an attractive PEG ratio on its P/E of 10.8 times 2011 earnings. After a dip from 31 in January to 28.50, it has now returned to its high with a consensus target price of 38 and high target of 43. Skechers USA (NYSE: SKX) did well for us in the 2003-2007 bull market, jumping sevenfold from 5 to 35 before falling back to 5 in the 2007-2009 bear market. Now it’s back at 30 with a consensus target of 38. Based in Manhattan Beach, CA, SKX designs and distributes footwear worldwide for men, women and children. Revenues are projected to rise from $1.4 billion to $1.6 billion this year and $1.8 billion in 2011 with earnings jumping from $1.01 to $2.35 per share this year and $2.86 in 2011. Parexel International (NASDAQ: PRXL) is a well-established international contract research organization (CRO) based in Waltham, MA. It also provides medical communications services and technology products to drug, biotech and medical device clients. Earnings, which slowed during the recession, are picking up speed, with the 5-year consensus growth estimate recently upped from 15.6% to 17%. In recently raising its growth guidance, PRXLcited a current order backlog of $2.3 billion, twice the revenue estimate for its current June 30 fiscal year. JDA Software Group (NASDAQ: JDAS) has a razor-tooth price chart, but each setback seems to be followed by a higher high. Operating worldwide out of Scottsdale, AZ, 25-year-old JDAS is an established provider of enterprise software to a broad range of companies. Earnings are headed from $1.45 to $1.86 this year and $2.42 in 2011, according to Zacks, with the four analysts covering it all rating the stock a strong buy at just 11.6 times year-ahead earnings. Awell-deserved multiple expansion to 15 would make 36 a realistic price target. Learn more about this financial newsletter at Stephen Quickel's US Investment Report. |
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Diversification today means owning in the main leaders in consumer, healthcare and technology sectors. The strongest, most durable growth stocks may be found in the various sub-sectors of those broad groups.