This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Bill Gunderson's Radio Play of the Day: A Fast-Growing Catamaran

NEW YORK (TheStreet) -- Just how much correlation is there between earnings growth and stock price appreciation?

In 2012, Fortune Magazine named Catamaran Corp. (CTRX) the 12th-fastest growing company in America. It listed Catamaran's revenue growth at 72% per year (three-year average), and profit growth at 52% per year.

Now let's check the returns to shareholders:

Data from Best Stocks Now App

Let's see, three-year average profit growth of 42% per year and three-year average returns to shareholders of 49.9%! I would call that a pretty strong correlation. I could show many such examples from today's market.

Maybe Fortune should have looked out even longer at the company's five-year earnings growth. I see five-year average returns of almost 82% per year to shareholders. Those returns make it one of the top-performing stocks over the last five years.

It should also be noted that Catamaran was up 28.8% in 2008 when the market was down 38.5%. I asked CFO Jeff Park about this on my radio show on Monday. You can hear the interview here.

Of course, there are no guarantees the next time around, but this current four-year-old bullmMarket won't last forever.

It would seem that one of the tricks to the market is finding good stocks before they experience these huge surges in sales and earnings.

Let's not overlook companies that have already walked the walk, however.

While I like to invest in stocks that have racked up big growth and returns for their shareholders, I also refuse to overlook valuation, as so many momentum investors fail to do.

Let's take a peek at the current valuation of this Lisle, Ill.-based large-cap company:

Data from Best Stocks Now App

The shares are currently trading at 22 times its forward earnings estimates. While this may seem a little rich, we have to consider its past growth record and its future forecasts.

If the company can continue to grow at the 30% rate that the analysts think that it can, it is currently trading at a discount to those earnings.

In fact, the PEG ratio is 0.74.

Stock quotes in this article: CTRX 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs