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Best Growth Stocks for 2012

Stocks in this article: AMZN GOOG PCLN ECL ANR

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By David Sterman

NEW YORK ( StreetAuthority) -- Thanks to a big drop in sales in 2008 and early 2009, a large number of companies were able to post impressive revenue gains in 2010 and 2011, as demand for goods and services returned to normal levels.

But this might be the end of it: Analysts expect sales growth to be much more muted in 2012. In fact, only 23 companies in the S&P 500 could be register sales increases of at least 20% in the coming year. In addition, a number of these firms could only hit this mark due to recent acquisitions, which underscores my belief that deal-making will be a prominent investing theme in 2012.

So where can you find growth in the coming year? Here's a list of the select few candidates that could actually post revenue growth next year. Take a look...

For starters, it's impressive to see (AMZN), Google (GOOG) and (PCLN) on this list.

These companies are already quite large, and robust growth should be hard to come by at this stage of their businesses. Kudos to their respective management teams for keeping their feet firmly applied to the gas pedal.

You can also find a number of growth-through-acquisitions names on this list. The only area that should see widespread organic growth is in the energy sector, as a number of oil and gas drillers tap into new shale formations across the United States. If natural-gas prices somehow manage to break out of their dismal, ever-lower trading range, then these projected revenue growth rates could spike even higher.

Yet "buying growth" isn't a bad way to boost shareholder value. Ecolab's (ECL) December 2011 acquisition of environmental services firm Nalco has been a clear hit with investors, with shares of Ecolab now trading near an all-time high. Ecolab is a leading provider of cleaning products and services, and though the deal doesn't necessarily mark a deep strategic fit, it adds "another business with a track record of generating high returns on invested capital," according to Morningstar.

Ironically, Ecolab's chief rival Diversey has just been acquired by packaging firm Sealed Air (SEE), setting the stage for more than 50% sales gains for this firm as well. But investors have not been as kind to this deal, partially because of Sealed Air's tepid third-quarter results. Investors appear to be frightened by the amount of debt Sealed Air took on to complete the deal, as net debt now stands at four times pro-forma 2011 EBITDA. Shares trade just above the 52-week low, at about $17.

Still, this sets up a chance for share-price gains when the company starts to address the debt concerns. Management is committed to pay down debt aggressively in 2012 and 2013, and "such deleveraging should ultimately accrue to shareholder value," according to Merrill Lynch, which sees shares rising from a recent $18 to $26.

A winning deal to the rescue?

A quick glance at the price chart for Alpha Resources (ANR) tells you investors could care less about acquisition strategies if the sector in question holds little appeal. Alpha acquired Massey Energy in June 2011, capping off a series of deals that made the company a leading exporter of coal. Sales rose from $444 million in 2004 to nearly $4 billion in 2010, and they should approach $9 billion next year (thanks in large part to the Massey purchase).

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