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Monday, November 30, 2009

Q3-2009 Growth Report - Part 2. Who are the Growth Elite?

Last week I released the first part of this series entitled "Q3 Growth Report - Part 1". In that post I presented some of the data compiled by our Alert HQ processes. The focus was on Revenue and earnings per share. I contrasted 2009 Q1 and Q2 results with our recent Q3 results. In this post, I'll do the same with dividends.

Increasing Dividends --

For today's purposes, I'll highlight the companies that managed to increase dividends this quarter.

The following table provides the comparison among the three quarters:


Q1-2009
Q2-2009
Q3-2009
In S&P 500
140
112
104
All stocks
829
778
826

The number of stocks in the S&P 500 that increased their dividend and have made it onto Part 2 of this quarter’s report has decreased yet again though only by a little.

More encouraging, the number of stocks that raised their dividend is up by more than 6%. Note that we are looking at a universe of roughly 7000 stocks.

Repeat winners --

There were 516 stocks that were listed in both the Q1 and Q2 reports and 550 that qualified in both the Q2 and Q3 reports. Then we have 334 stocks that are on all three lists. These are the real dividend growers but unfortunately there are too many to list here; therefore, I have listed them in the spreadsheet that contains the detailed lists from which the table above was derived. You can download the Q3 dividend spreadsheet by clicking on this link.

Growth Elite --

The nine stocks in the following table were obtained by looking for those that were included in both types of Growth Report. In other words, these are the stocks that raised dividends as well as showed growth in earnings and revenues for the last three quarters.

Symbol
Name
AVCA
Advocat, Inc.
FMR
FIRST MERCURY FINANCIAL CORPORATION
HTS
HATTERAS FINANCIAL CORP.
MNRO
Monro Muffler Brake, Inc.
NHC
NATIONAL HEALTHCARE CORP.
ROST
Ross Stores, Inc.
RTN
RAYTHEON COMPANY
SEP
SPECTRA ENERGY PARTNERS, LP
TJX
TJX COMPANIES, INC. (THE)

Is growth rewarded?


I had expected to see that the growth elite, those nine stocks in the table above, would have also exhibited strong stock price appreciation. My feeling was that this kind of consistent financial performance would have guaranteed price gains across the board. To my surprise, that was not the case.

To be sure, most of the stocks in this table have performed very well but a few of them have been less than stellar. Let's run through the weekly charts.



 

 

 

 

 

 

 

 

So out of nine stocks with consistent improvement in their financial results, only two, First Mercury Financial (FMR) and National HealthCare (NHC) have done relatively poorly.

The rest have been pretty strong performers and only one failed to show gains exceeding those exhibited by the major averages. The S&P 500 is up roughly 30% since January 1, 2009. Of the seven best performing stocks in this list, most registered gains of 40% to 100%, well exceeding the gain of the market.

All in all, membership in the Growth Elite seems to be a pretty decent predictor of superior gains.

Disclosure: no positions in any stocks mentioned in this post.

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