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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Unloved Growth Funds That Could Be Poised to Soar

Aggressive-growth funds ranked among the stars of the late 1990s bull market. At the time, technology stocks were climbing, and aggressive-growth funds attracted a flood of assets. Leading growth fund companies of the era included Pilgrim Baxter, Janus, and Putnam. But the highflyers crashed when Internet stocks sank in 2000. Since then, many of the aggressive-growth funds have gone out of business or toned down their approaches to focus on modestly priced stocks.

One of longest-serving aggressive-growth managers is Robert Turner, who has been chairman of Turner Investment Partners for two decades. Despite suffering through the downturns, Turner has clung to his style of buying stocks with accelerating earnings. Now he argues that his approach is due to come back in favor soon. He says that aggressive-growth stocks had some periods of strong performance in the third quarter, and the style should come back to life as the economy continues growing slowly. "In a sluggish environment, investors will turn to stocks that can show rapid earnings growth," he says.

Turner is bullish on technology. His Turner Large Growth Fund (TCGFX) has 38% of assets in the sector. He says that champion companies such as Apple (AAPL) and Google (GOOG), should remain standouts, posting strong earnings gains at a time when most other companies will be sluggish.

Turner is especially keen on data storage companies. The amount of data being generated is growing explosively as consumers around the world buy more smart phones and tablet computers. Every time you use a mobile phone to open a Facebook page, you generate data that is stored. Companies are spending heavily on data storage to learn more about how consumers are reacting.

A favorite holding of Turner's is EMC (EMC) which offers cloud-based systems that store and manage business information. Earnings have been increasing at a 19% annual rate.

Another holding is Fusion-io (FIO), which provides software that helps companies manage data. The company's revenue increased 82% in its last fiscal year. Management projected that revenue will grow 45% next year.

Turner says that he is finding plenty of growth stars these days. The average annual earnings growth rate of stocks in Turner Emerging Growth is 15.8%. Such stocks could soar if the economy continues growing. That could result in big gains for investors who have the stomach to buy aggressive- growth funds at a time when the market outlook appears shaky.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

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.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

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