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NEW YORK ( TheStreet) -- I'm going to make a case for hyper-growth stocks.
My definition for hyper-growth is a stock that Wall Street analysts project will have double-digit growth in both sales and earnings. I'll offer the premise that if rising revenue and earnings are eventually reflected in a rising share price, then I'd like a portfolio loaded with those stocks that have the highest growth in revenue and earnings.
Using stock screeners, I looked for stocks projected to increase earnings by an annual rate of 25% for the next five years that are hitting the most frequent new highs. My screening came up with
NQ Mobile(NQ - Get Report), formerly NetQin Mobile, a packaged software company with a market cap of $517.08 million and sales of about $21.825 million in the last 12 months.
It describes itself as a global mobile security privacy and productivity software company co-headquartered in Beijing and Dallas and trades in ADRs.
Of course I'd expect the stock to increase faster than the general market as gauged by the Value Line Index. Sure enough, the index increased 10.79% in the last six months while NQ Mobile gained 126.30% during the same period:
Let's look at some of the other factors:
Fundamental factors: Its market cap is $517.08 million and the stock has been trading around 3.7 million shares a day recently. The stock has a P/E of 98.33.
Analysts project revenue to grow 102.7% this year and another 40.7% next year. Earnings are estimated to increase 57.6% this year, an additional 26% next year and continue to increase by 40% annually for the next five years.
Technical factors provided by Barchart: The stock has a Trend Spotter buy signal and 96% technical buy signals. It is currently trading above its 20-, 50- and 100-day moving averages and advanced 20 times in the last three months for a gain of 229.45%. Barchart computes a technical support level at 16.53 and the Relative Strength Index is 68.96%. It closed Monday at $18.53 with a 50-day moving average of 11.76.
Investor interest: Wall Street analysts issued two strong buy and two buy recommendations while institutional ownership is a low 8.7%. Only 76 individual investors on
Motley Fool have given a opinion on the stock but they gave a 61% vote for it to beat the market. The short interest in growing from around two million shares in January to over 5.2 million shares recently.
Comparisons: In the last six months, NQ was up 186.23%, with
Microsoft(MSFT) up 13.21%,
Oracle(ORCL) down 8.70% and
SAP(SAP) down 6.20%: