Laser-Like Growth at FlirGARP (growth at a reasonable price). That's what money manager Eddie Brown, who coined the phrase in 1983, and other dedicated growth investors live for. Brown says "the cheapest value" now among growth stocks is Flir Systems (FLIR), No. 1 in infrared technology for various purposes, including military uses.
Flir stock climbed to 29.77 on Oct. 21, up from a 52-week low of 18.81 on Mar. 9. "By most fundamental metrics, Flir outscores its peers," says Brown, president of Brown Capital Management, whose Mid-Cap Fund handily outpaced the broader Russell MidCap index.
Flir products such as infrared cameras, sensors, and lasers are used by the government (53% of sales) for search and rescue, surveillance, and drug-trade monitoring. Thermal imaging for industrial use accounts for 30%, and commercial security, 17%. Flir's price-earnings ratio of 19 is below its estimated yearly earnings growth rate of 22% over the next three to five years, which means more share-price growth ahead, notes Brown.
Christopher Donaghey of SunTrust Robinson Humphrey, who rates Flir a buy, sees long-term advances "driven by the shift in focus of the U.S. military toward irregular warfare." He sees earnings of $1.43 a share in 2009 and $1.56 in 2010.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.Atwood Sharpens Its Drill BitsIn the oil patch, a compelling growth play is Atwood Oceanics (ATW), which provides offshore drilling services to major oil and gas companies. "Atwood is way underpriced on strong estimated sales and profits over the next two years," says William Rutherford, president of Rutherford Investment Management, which owns shares.
It's poised to benefit from the rise in international offshore drilling as the price of oil surges, he adds. Its stock has been on a tear, bolting to 38.12 on Oct. 21 from a low of 13.49 on Mar. 9. Atwood is currently drilling in the Gulf of Mexico and in countries such as Australia, Thailand, and Turkey.
Lewis Kreps of Jesup & Lamont rates Atwood a buy and sees it hitting 66 in a year. Atwood's fleet of rigs are booked 70% in 2009 and 65%, so far, in 2010. Kreps expects earnings of $3.80 in 2009, $4.15 in 2010, and $5.50 in 2011.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.A Revitalized PfizerPfizer (PFE), a big laggard last year, has mounted a robust recovery, rising to 17.41 a share on Oct. 21 from 11 in March. The steady progress is partly because the drugmaker is regarded as the "new" Pfizer by some pros who see it gaining from its recent purchase of Wyeth. The combination will revitalize Pfizer's revenues and bring $4 billion in cost synergies, says Herman Saftlas of Standard & Poor's (MHP), who rates Pfizer a buy.
According to Bloomberg, 20 of 24 analysts who track Pfizer rate it a buy, and four tag it a hold. The Street's optimism, says Tim Anderson of Sanford C. Bernstein, is due to Pfizer's low valuation, a 3.8% dividend yield that's expected to rise in December, and new products, including one for rheumatoid arthritis. Barbara Ryan of Deutsche Bank (DB), rating Pfizer a buy, foresees earnings of $1.94 in 2009 and $2.34 in 2010. Her 12-month target: 25.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.