Today's Wall Street Journal had an article that asked the question "Can Rally Run without Revenue?" Is the revenue situation really that bad?
Let's take a quick look at some the data compiled through the Alert HQ process.
After each quarter's earnings season, I try to pull together what I am now calling the Growth Report. Part 1 compiles the list of stocks that have shown a year-over-year increase in both revenue and earnings AND a sequential quarter-over-quarter increase in both revenue and earnings. Given the severity of the economic downturn, very few companies have been able to to pull off this trick.
The following table presents a comparison of the last two quarters:
The number of stocks in the S&P 500 that qualify as growth leaders and have made it onto the Q2 Growth Report has grown by 50%.
Similarly, looking at the entire stock market, the number of growth leaders has almost doubled in Q2 as compared to Q1.
The following chart shows the S&P 500 over the course of the last couple of years. This chart shows that in a year-over-year comparison stock prices, as well as revenues and earnings, were considerably higher than they are currently. This indicates what an accomplishment it is to have made it onto our Growth Report.
Repeat winners --
Note that there are 66 stocks that made the list in both quarters. These guys are the real growth leaders so I feel compelled to list them all here:
Conclusion --
So the Wall Street Journal has a point. It's true that cost cutting can't support rising stock prices for long; however, it's clear that slowly but surely revenues and earnings are indeed improving. There has been a significant increase in the number of stocks that are making our rather exclusive club of growth leaders. That can't be bad for the market outlook.
Click this link to download a spreadsheet that lists all the individual stocks that qualified for the Q2 Growth Report.
You may also be interested in Part 2 of the Q2 Growth Report listing those stocks that have found a way to raise their dividends despite the challenging economic backdrop.
Disclosure: no positions in stocks mentioned in this post
Let's take a quick look at some the data compiled through the Alert HQ process.
After each quarter's earnings season, I try to pull together what I am now calling the Growth Report. Part 1 compiles the list of stocks that have shown a year-over-year increase in both revenue and earnings AND a sequential quarter-over-quarter increase in both revenue and earnings. Given the severity of the economic downturn, very few companies have been able to to pull off this trick.
The following table presents a comparison of the last two quarters:
| Q1-2009 | Q2-2009 | |
|---|---|---|
| In S&P 500 | 27 | 41 |
| All stocks | 218 | 312 |
The number of stocks in the S&P 500 that qualify as growth leaders and have made it onto the Q2 Growth Report has grown by 50%.
Similarly, looking at the entire stock market, the number of growth leaders has almost doubled in Q2 as compared to Q1.
The following chart shows the S&P 500 over the course of the last couple of years. This chart shows that in a year-over-year comparison stock prices, as well as revenues and earnings, were considerably higher than they are currently. This indicates what an accomplishment it is to have made it onto our Growth Report.
Repeat winners --
Note that there are 66 stocks that made the list in both quarters. These guys are the real growth leaders so I feel compelled to list them all here:
| Symbol | Name |
|---|---|
| AFAM | Almost Family Inc |
| AIRM | Air Methods Corporation |
| AMED | Amedisys Inc |
| APT | ALPHA PRO TECH, LTD. |
| ASIA | AsiaInfo Holdings, Inc. |
| BUCY | Bucyrus International, Inc. |
| CACC | Credit Acceptance Corporation |
| CACI | CACI INTERNATIONAL CLA |
| CFSG | China Fire & Security Group, Inc. |
| CMCSA | Comcast Corporation |
| CMCSK | Comcast Corporation |
| CMG | CHIPOTLE MEXICAN GRILL, INC. |
| CNQR | Concur Technologies, Inc. |
| CNU | CONTINUCARE CORPORATION |
| COCO | Corinthian Colleges, Inc. |
| CRM | SALESFORCE.COM, INC. |
| CRN | CORNELL COMPANIES, INC. |
| CTFO | China TransInfo Technology Corp. |
| CUB | CUBIC CORPORATION |
| CYH | COMMUNITY HEALTH S. (NEW) |
| DGX | QUEST DIAGNOSTICS INC. |
| DLM | DEL MONTE FOODS COMPANY |
| EBIX | Ebix Inc |
| EBS | EMERGENT BIOSOLUTIONS, INC. |
| EMS | EMERGENCY MEDICAL SERVICES CORPORATION |
| ESLT | Elbit Systems Ltd. |
| FCN | FTI CONSULTING, INC. |
| FMR | FIRST MERCURY FINANCIAL CORPORATION |
| GTS | TRIPLE-S MANAGEMENT CORP. |
| GXDX | Genoptix, Inc. |
| HGRD | Health Grades, Inc. |
| HTS | HATTERAS FINANCIAL CORP. |
| IDCC | InterDigital, Inc. |
| INMD | IntegraMed America, Inc. |
| JJSF | J & J Snack Foods Corp. |
| LH | LABORATORY CORP. OF AMER. |
| LINC | Lincoln Educational Services Corporation |
| MED | MEDIFAST, INC. |
| MHS | MEDCO HEALTH SOLUTIONS, INC. |
| MTR | MESA ROYALTY TRUST |
| NHC | NATIONAL HEALTHCARE CORP. |
| ORLY | O'Reilly Automotive, Inc. |
| PEGA | Pegasystems Inc. |
| PSYS | Psychiatric Solutions, Inc. |
| RAX | RACKSPACE HOSTING, INC. |
| RGR | STURM, RUGER & COMPANY, INC. |
| RMD | RESMED INC. |
| ROST | Ross Stores, Inc. |
| SEP | SPECTRA ENERGY PARTNERS, LP |
| SF | STIFEL FINANCIAL CORP. |
| SNAK | The Inventure Group, Inc. |
| SQM | SOCIEDAD QUIMICA Y MINERA DE CHILE SA |
| SRCL | Stericycle, Inc. |
| SVT | SERVOTRONICS, INC. |
| TNDM | Neutral Tandem, Inc. |
| TRCR | Transcend Services, Inc. |
| TRU | TORCH ENERGY ROYALTY TRUST |
| TSTC | Telestone Technologies Corp. |
| TTEK | Tetra Tech, Inc. |
| TYL | TYLER TECHNOLOGIES, INC. |
| UHT | UNIVERSAL HEALTH REALTY INCOME TRUST |
| VIT | VANCEINFO TECHNOLOGIES INC |
| VR | VALIDUS HOLDINGS, LTD. |
| WMS | WMS INDS, INC. |
| WOOF | VCA Antech, Inc. |
| YORW | The York Water Company |
Conclusion --
So the Wall Street Journal has a point. It's true that cost cutting can't support rising stock prices for long; however, it's clear that slowly but surely revenues and earnings are indeed improving. There has been a significant increase in the number of stocks that are making our rather exclusive club of growth leaders. That can't be bad for the market outlook.
Click this link to download a spreadsheet that lists all the individual stocks that qualified for the Q2 Growth Report.
You may also be interested in Part 2 of the Q2 Growth Report listing those stocks that have found a way to raise their dividends despite the challenging economic backdrop.
Disclosure: no positions in stocks mentioned in this post
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