The Wall Street Journal-20080131-SmartMoney Stock Screen - Fast-Growth Stocks

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SmartMoney Stock Screen / Fast-Growth Stocks

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I may have joined a cult by accident. First, I bought that clever iPhone. Then I went in for a big-screen iMac. Lately -- this is awkward to admit -- I voluntarily watch the occasional commercial on Apple's Web site just to see how PC Guy has made a fool of himself this time.

But to be a true believer, you must love the stock no matter the price. On Jan. 3 in this space I turned on Apple at more than $190 a share. I was worried its market value had exceeded the combined worth of Hewlett-Packard and Research in Motion, which together produce four times Apple's sales and twice its profits. Now the stock fetches around $130. A fresh look at the numbers suggests the new price is optimistic, but not overly so. Apple is expected to increase its earnings per share by 16% over the next four quarters, vs. 56% over the past four. That's not as dire a slowdown as it sounds. It's a product of an extraordinarily profitable past four quarters for Apple and a general slowdown in consumer spending.

The average stock right now goes for around 15 times trailing profits (the stock market's historic average). Apple is growing two- thirds faster than the average company, and so is perhaps worth two- thirds more: 25 times trailing earnings instead of 15. That puts shares at $114. Apple has beaten forecasts of late, but by a gradually smaller margin: 36% four quarters ago, then 28%, then 17% and most recently 9%. Assume a 5% upside surprise over the next year and there's no shame in paying $130 a share today. Apple turned up recently in a recent search for fast growers topping earnings estimates.

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Fast Growers

These eight companies have had impressive earnings and sales growth.

3-Yr. 3-Yr. Forward P/E

Company Sales Earnings (Current

(Ticker) Industry Price Growth Growth Year)

Apple (AAPL)

Personal Computers $130.01 32% 70% 25

Buffalo Wild Wings (BWLD)

Restaurants 23.01 23 40 17

GameStop (GME)

Electronics Stores 50.55 51 31 29

Google (GOOG)

Internet-Information Providers 555.98 75 123 30

Hologic (HOLX)

Medical Appliances/Equip. 61.35 49 69 30

LKQ (LKQX)

Auto Parts 19.34 29 27 29

Nvidia (NVDA)

Semiconductor 24.65 22 77 19

Tidewater (TDW)

Shipping 51.29 20 78 8

Note: Data as of Jan. 28, 2008

Source: Hemscott