As corporate profits race ahead, sales are merely strolling. The median S&P 500 company posted a 20% jump in adjusted earnings per share in its most recent quarter, versus an 8% improvement in revenues. Many companies are combining merely modest sales growth with aggressive cost-cutting, spurring short-term returns but raising questions about long-term ones. Among companies with big sales gains, many have grown through acquisitions rather than rising demand.
The three companies below are genuine fast-growers. Each increased its sales by at least 30% a year over the last several years and did so again in its most recent quarter — without the benefit of major acquisitions. Also, each is expected to increase its sales and earnings per share by 30% in its current fiscal year.
Americans are mostly fat and widely underemployed. That may help explain the rapid growth of Medifast (MED: 29.32, -0.08, -0.27%), a diet company that relies in part on a growing army of independent "health coaches," who share in sales of food products they and their downstream coaches recommend. Sales for the program increased at a compounded average rate of 61% from 2005 to 2009. The company also sells its products directly and has center-based programs. Total sales are expected to swell 57% this year, compared with just a 1% bump for Weight Watchers (WTW: 37.06, +1.54, +4.33%), a 1% decline for NutriSystem (NTRI: 20.11, +0.34, +1.71%) and 25% growth for tiny, profitless EDiets.com (DIET: 0.64, -0.03, -4.47%). Shares of Medifast sell for 20 times forecast 2010 earnings. (more)
LEARN TO TRADE DOW JONES PROFITABLY. CLICK HERE.