Part Seven: Seven Growth Stocks Chosen to Let You Sleep at Night

For investors who want in on the growth game but prefer less melodrama in their portfolios, YCharts suggests creating another genre: sane growth. In our estimation, a sane growth portfolio would be packed with companies that manage decent sales gains but maintain a few safety valves typically missing in popular growth stocks: like reasonable share price valuations and earnings commensurate with revenues. In fact, right now looks like an especially good time to invest in sanity over popularity.

Go to YCharts for Part One of growth stocks, which explains the list in more detail.

With the mission of reducing risk, YCharts looked around for growing companies with sane data. We set the YCharts Stock Screener to find companies that reported sales growth of at least 10% over the past 12 months and at least that rate of retained earnings growth. We insisted on an historic price to sales ratio of less than 1.5. To weed out companies with weak balance sheets, we looked only at companies that received at 7 or higher from YCharts Pro for fundamentals. As an added safety, we considered only companies with market caps of at least $2.5 billion.


We can all be jealous of the 150%-plus returns that investors in Oil States International have seen on their shares in barely three years. But it’s important to understand that the path to riches is pretty bumpy with this one. Oil States shares can fall hard fast, as seen in this stock chart.

OIS Chart

OIS data by YCharts

In addition to providing rigs and other equipment for drillers, the company sets up mobile offices and housing for oil production companies working in remote fields around the world. (Mines, as well.) As such, its fortunes are completely vulnerable to swings in the prices of all those mined commodities. Companies cut back on drilling and mining when prices are low, leaving little for Oil States to do. The oil industry’s pullback from natural gas fields after those prices dropped last year is probably the biggest factor behind Oil State’s share price fall this year.

Henry Hub Natural Gas Spot Price Chart

Henry Hub Natural Gas Spot Price data by YCharts

Nevertheless, Oil States had a 44% gain in revenues in the past year and record first quarter earnings, largely because it had the equipment ready to lease when drillers suddenly switched from natural gas to liquids production.

OIS Revenue TTM Chart

OIS Revenue TTM data by YCharts

The company has a reputation for beating analyst earnings forecasts often. Analysts predict another 20%-plus revenue advance this year although not so much on earnings.

The recent share price drop has pushed Oil States’ PE ratio down around 10 and its price sales ratio around one.

OIS PE Ratio Chart

OIS PE Ratio data by YCharts

Companies covered in this series: Coinstar (CSTR), VF Corp. (VFC), Davita (DVA), United Natural Foods (UNFI), Dollar General (DG), Airgas (ARG), and Oil States International (OIS).

To read part one of this series, go to YCharts To read part two of this, go to YCharts. To read part three, go to YCharts. For part four, go to YCharts. For part five, go to YCharts. For part six, go to YCharts.

Dee Gill is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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