The service-driven nature of OMC's business means that the firm is able to collect fairly strong net margins for its work -- approaching double digits in the most recent quarter. An uptick in global advertising spending should provide a serious tailwind for Omnicom's business in the next couple of years. As the firm rebounds off of cyclical ad spending lows, investors should prosper.
Industrial conglomerate Dover (DOV) owns 40 distinct manufacturing businesses that are primarily focused on bringing niche products to commercial and industrial customers. While that may not sound like the most interesting business, it is certainly a lucrative one.
Dover's business units are more or less autonomous, a management approach that's been very successful for the firm. By minimizing centralized decision making, the firm avoids a management bottleneck and it enables individual subsidiaries to take ownership of their financial performance. Clearly the approach works. Dover converted more than 10 cents on every sales dollar into profits last year, an impressive level of profitability for a stock that's heavily involved in industrial businesses.Growth-by-acquisition has historically been Dover's approach to growth. And while that's successfully built the firm into a profitable conglomerate, it's also boosted the debt on Dover's balance sheet. Management will need to continue keep purchases in check in 2013 to retain its high level of financial performance for shareholders. That said, rising analyst sentiment is putting this Rocket Stock on our radar this week; we're betting on shares. Motorola Solutions Last but certainly not least on our list of Rocket Stock names is Motorola Solutions (MSI). The firm is arguably the more attractive half of Motorola's business after the firm spun off its beleaguered handset business in 2011 (it was subsequently acquired by Google (GOOG)), and that's showing in MSI's price performance in 2013: shares have climbed more than 11% year-to-date. MSI serves government and enterprise customers with hardware, software and services to communicate better. Those offerings range from long-range two-way radios to barcode scanners, wireless LAN networking tools, and RFID chips. I'll be the first to admit that those businesses don't carry the mass-market appeal of handsets right now, but they do make money. The firm's exposure to contract revenues from sources like the U.S. government provides some nice income statement risk reduction that's less threatened by DoD budget constraints. Meanwhile, enterprise IT spending offers one of the biggest potential growth platforms for MSI in the next few years.
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