When investors discuss growth stocks to buy they are usually talking about the most popular issues of the day. These tend to be the companies that dominate the headlines and have the newest, most exciting products and services.
While stocks like Google Inc. (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL) and other market darlings have rewarded investors, when they become too popular there is a risk that the valuations become unsustainable and the shares find a new lower level.
Often it can take many years for a broken growth stock to get back on track and allow investors to recover lost gains.
There is another way to approach growth stocks that's more successful than targeting the most talked about companies. The stocks aren't always as well-known - but the returns can be even higher.
It's fairly simple to put together a list of stocks that have been able to grow sales, earnings and dividends at a double-digit rate for at least the last ten years.
As a further qualifier you should limit your list to those that have been able to successfully grow the book, or net asset value, of the company at a high rate. This is an indication that management has been able to generate free-cash flow and reinvest in the business successfully. All too often companies that initially boast strong revenue and profit growth fall victim to high capital expenditures or startup costs that squeeze profits and make the growth unsustainable.
The following companies may not be the most exciting, but they have products and services that are in high demand and have been so for an extended period of time.
Stocks to Buy for Soaring GrowthOne of the leading quiet growth stocks that the search turns up is Potash Corp. (NYSE: POT).
There is nothing exciting or sexy about the fertilizer business except for the growth of this company. Over the past decade, Potash has been able to grow sales at 15% while high demand has increased profit margins and profits have swelled by 28.5% annually.
With a dividend yield of 2.8%, this isn't a high-yield stock but the payout has grown by around 20% per year for the past 10 years. Over that time frame the stock has gained 1,120%, or 28.4% annually.
After a period of weak demand for its fertilizer products, Potash is seeing demand begin to firm again. The world's growing population and the emerging markets continue to develop a middle class that wants better quality food. These two factors should drive demand for fertilizer for many years.
Unlike some "market darling" stocks that trade up to 30 or 40 times earnings, Potash trades at just 16 times current earnings, and 11 times the expected results for 2013.
America Movil SAB de CV (NYSE: AMX) is another stock that rarely makes the headlines or catches the attention of market pundits but has shown extraordinary growth over the past decade.
The Latin American telecommunications company is one of the holdings of Carlos Slim, who once again in 2013 topped the list of Forbes Billionaires.
The company offers wireless and fixed-line phone services throughout the region and has grown at a rapid pace. Earnings have grown by more than 60% on an average annual basis on 25% average annual gains in sales.
The stock yields 1.5% at the current price, but management has consistently increased the dividend by almost 50% annually. The stock has returned 866%, or more than 25% annually, over the decade, as it has benefitted from wireless growth in the region.
Latin American is showing signs of recovery after the impact of the global economic slowdown. The Brazilian government is taking steps to reignite growth before the 2014 World Cup and 2016 Olympics take place in the nation. Mexico has shown solid economic growth in recent months as well.
Less than half of the company's user base has smartphones, so there are opportunities to expand the smartphone and data business throughout the region as well. And the stock is a deal as it currently sells at just 10 times earnings.
For more stocks to buy, check out this list of five companies Warren Buffett and insiders can't get enough of right now.
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