OFF THE CHARTS
A monthly screen for interesting stocks*
Some stock screens are straightforward; Jim Slater’s Zulu Principle isn’t. The British investment guru’s growth strategy blends metrics including price-to-earnings growth, forward price-to-earnings ratio, earnings-per-share growth, relative price strength and return on capital. These firms score best in the U.S.
Investors have been avoiding any company with the word “energy” in its name, but there’s no reason to fear Energy Focus. The Ohio-based company designs and manufactures energyefficient LED lighting products, and it’s growing at an incredible rate. In its most recent quarter, the company reported earnings per share of 41¢ (U.S.), which is 28¢ above the consensus estimate. Until the 1990s, Energy Focus was in the business of illuminating residential swimming pools; today it plays in a much bigger body of water, designing lighting systems for the U.S. navy, along with Department of Energy research projects. This Massachusetts company provides translation and localization services, which ensure marketing campaigns are relevant in local markets while maintaining global brand consistency. Despite a large order cancellation from Samsung, Lionbridge grew its revenues by 19% in its latest quarter over the previous year. Going forward, any problems with a single client shouldn’t have as big an impact. A year ago, the company’s top 10 clients accounted for 55% its revenues; now they represent 47%. Vincent Colicchio at Barrington Research projects earnings-per-share growth of 52% for 2015. He feels “the valuation looks compelling.” Small kids get excited when they see a freight truck and are in awe when a cargo jet flies overhead. Investors wanting to recapture that childlike love of big rigs just need to look at Radiant Logistics’ sales growth. Over the past eight years, revenues have jumped fivefold to more than US$500 million. The company’s aggressive acquisition strategy is helping raise that figure. Marco Rodriguez at Stonegate Capital Markets argues that its increased size will lead to improved buying power. Although still a young company, Radiant has a proprietary IT system that gives it an advantage over smaller players—which are ripe acquisition targets.
*Share prices charted from Feb. 3, 2015–Feb. 2, 2016