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Five Growth Stocks For Young Investors

You don’t need to be a day-trading CNBC junkie to put a few growth stocks in your portfolio. In fact, a few well-placed growth stocks might serve long-run buy-and-hold investors well.

Today, let’s look at five companies that are good growth stocks to invest in for the next three to five years.

These companies vary in size, sector, and price, but they all have the potential to outperform competitors. There are two infrastructure stocks, two technology companies, and one financial institution. Some of these companies are blue chip names; others are hidden gems that you may not have heard much about before.

Terex Corp (TEX)

Terex is a nice turnaround play for risk-taking investors. Terex is an infrastructure company that manufactures equipment and machinery for engineering and construction firms.

Terex has had some rough quarters as the construction industry has performed miserably over the fast few years. The company is projected to lose $1.10 per share for the current year. Things are looking up for Terex however. Value investor Mohnish Pabrai has been buying shares of Terex. Shares are trading below book value and the company has a solid balance sheet. The equipment maker is expected to return to profitability in 2011 as commercial equipment spending begins to return to normal.

Bucyrus International (BUCY)

Bucyrus International is a growth story that is still in the early stages. Bucyrus manufactures mining equipment for companies drilling for gold, copper, oil, and other natural resources.

Bucyrus International has been increasing its market share by recently acquiring all of Terex’s mining interests for $1.3 billion dollars. The stock is cheap at just $53. The company trades at 10.5 times forward earnings and has a growth rate of 12.6%. The mining equipment manufacturer should benefit from growing demand for commodities in internationally.

Blackboard (BBBB)

Blackboard is the tiny company that no one talks about. With a market cap of just over $1 billion dollars, Blackboard doesn’t have the large following of blue chip stocks. Blackboard provides e-learning solutions for colleges and K-12 institutions.

The company has a virtual monopoly on online learning applications. Blackboard is growing its businesses through organic growth at a 10 to 15% clip. Earnings are expected to grow 20% a year over the next 5 years. The company currently trades at just 18 times earnings which is cheap for a company with such a bright future.

Apple (AAPL)

You can actually profit from the iPhone 4 “death grip”!

Shares are trading south of $250. That may seem expensive until you look at Apple’s earnings power. Apple could easily earn over $16 per share next year which means that shares trade at just 15 times forward earnings. That’s really low for a company projected to grow earnings at a 16.5% clip. There is no reason that Apple cannot sustain its earnings momentum for the next few years. The iPad tablet PC is a hit with consumers and Apple can continue to increase its profitability by making the iPhone available across additional carrier networks.

Wells Fargo (WFC)

For the first time in a long time, shares of Wells Fargo are getting cheap again.

The banking giant has long been a favorite of Warren Buffett. Shares have nosedived below $25 over the past week. The stock currently trades at just 1.2 times book value and has a forward P/E of 11. Wells Fargo is a premium franchise and is one of the most well capitalized banks in the U.S. Investors should get a great opportunity to buy shares after Wells announces earnings on July 21st.

Comments

  1. Great article. I forget about Blackboard. Thanks for the tis.

  2. I like how your- (I guess we can’t call them “recommendations”) focus on the stocks’ fundamentals, rather than on their price histories.

    But what is an “e-learning solution”, aside from corporate jargon? Blackboard’s own website talks about “learning experiences” and “education imperatives”, but I can’t figure out what they actually do or make.

    • Thanks Greg. Blackboard offers software that colleges use for their distance education courses. The Blackboard learning system lets universities offer couse content, modules, and assignments. Students can engage in discussions and online chats. The software is used by nearly 4,000 academic institutions.

  3. David Weliver says:

    I meant to chime in on Blackboard; I used to work in higher education publishing (textbooks) and could see that “e-learning” is the way of the future. My old employer was investing millions to catch up to them.

    IMO, they’re is going to be slow but steady and, ultimately, very rewarding. Definitely a good pick.

  4. Great picks. I’ve seen you mention Bucyrus and Blackboard in the past. I guess multi-mentions get bonus points? ;)

    Thanks for the recommendations.

  5. Wow, I never thought about Blackboard. I used it in college and I also agree that more and more classes will be taught online.

  6. when i was quite younger, i alway enjoy online chatting with friends and relatives ::

  7. online chats are nice, you can meet lots of friends and acquintances out there over the internet ;*’

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  9. Stock.Investments says:

    The recent downturn in Terex shareprice makes Terex a real bargain. The shares trade below book value of $20. Word on the Street has Terex undervalued and some say it could quickly hit the mid twenties. Buy Low Sell High

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