In a new report to clients, Credit Suisse's Andrew Garthwaite argues that growth stocks will outperform the market.
"Quality growth only tends to underperform if there is a sharp fall in junk bond yields (unlikely) or a sharp rise in economic indicators (we think only small rise is likely)," he writes.
Garthwaite and his team screened the market for the 29 best U.S. growth stocks based on analyst recommendations (they're all rated 'Outperform'), structural themes (e.g. industrial automation, energy efficiency), and the firm's HOLT model.
HOLT is the firm's proprietary valuation model that ranks stocks based on discounted cash flows. The stocks on this list have a HOLT score based on "% Change to Best Price," which is defined as "The percentage difference between the HOLT Default Forecast Warranted Value and the past week's closing share price. A high percentage upside improves the score."
The higher the percentage, the higher the growth potential for each selected stock.
We've collected Credit Suisse's 29 best stock picks for growth, starting with the lowest HOLT score.
Netsuite
Ticker: N
Sector: Business Software & Services
Forward P/E: 208.0
P/B: 33.8
HOLT: -91.1 percent
Netsuite offers cloud-based business management software in addition to industry-specific solutions for over 12,000 companies. In 2011, the company was named the Best Financial Management Software by the Software & Information Industry Association.
Source: Credit Suisse
Volcano
Ticker: VOLC
Sector: Medical Appliances & Equipment
Forward P/E: 62.6
P/B: 4.5
HOLT: -65.8 percent
Volcano Corp manufactures devices to aid in the facilitation of endovascular and cardiovascular procedures. The company combines imaging and therapy to provide optimal patient outcomes.
Source: Credit Suisse
Heartware
Ticker: HTWR
Sector: Medical Instruments & Supplies
Forward P/E: -32.1
P/B: 9.4
HOLT: -63.5 percent
Heartware is a global medical device company that specializes in heart therapies. Over 2,500 patients with advanced stage heart failure have used the company's Ventricular Assist System.
Source: Credit Suisse
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