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Three Growth Stocks for a Bear Market

ITC Holdings, Bio-Reference Laboraties and American Science & Engineering are growth stocks in safe industries.
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BOSTON (TheStreet) -- Investors who fear that U.S. equities could decline further should consider the following stocks. These fast-growing companies are likely to outperform if the European debt crisis continues to roil markets.

ITC Holdings

(ITC)

is an electricity provider in the Midwest. During the past three years, it has increased revenue 30% annually, on average, and boosted net income 42% a year. Its stock has returned 2.7% a year during the same period.

Quarter

: First-quarter profit increased 19% to $34 million, or 67 cents a share, as revenue grew 3.4%. The operating margin extended from 48% to 53%. ITC has $67 million of cash and $2.5 billion of debt, equal to a debt-to-equity ratio of 2.4.

Stock

: ITC has advanced 19% during the past year, trailing U.S. stock-market indices. It trades at a price-to-projected-earnings ratio of 15, a 23% premium to the industry average. It's also expensive based on book value, sales and cash flow.

Consensus

: Of analysts covering ITC, five, or 56%, advise purchasing its shares and four recommend holding them.

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

offers a price target of $64, leaving a potential 30% return.

Credit Suisse

(CS) - Get Credit Suisse Group AG Sponsored ADR Report

predicts the stock will hit $62.

Bio-Reference Laboratories

(BRLI)

provides lab testing services in the New York City area. Since 2007, it has increased revenue and net profit 23% a year. Its stock has achieved annualized gains of 20% during the same span.

Quarter

: Fiscal first-quarter profit rose 11% to $4 million, or 15 cents, as revenue increased 31%. The operating margin stretched from 6.6% to 7.5%. Bio-Reference holds $15 million of cash and $34 million of debt, equal to a debt-to-equity ratio of 0.3.

Stock

: Bio-Reference has climbed 73% during the past year, beating U.S. benchmarks. It sells for a price-to-projected-earnings ratio of 20 and a price-to-book ratio of 4.8, 47% and 70% premiums to peer averages. It's also costly based on sales.

TheStreet Recommends

Consensus

: Of the four researchers following Bio-Reference, one recommends buying and three suggest holding its shares.

Jefferies

(JEF) - Get Jefferies Financial Group Inc. Report

offers a target of $19, implying the stock could fall 14%.

William Blair

expects the shares to outperform.

American Science & Engineering

(ASEI)

develops X-ray inspection and other detection technologies for security markets. During the past three years, it has boosted revenue 16% annually, on average, and net income 14% a year.

Quarter

: Fiscal fourth-quarter profit soared 50% to $12 million, or $1.34, as revenue rose 24%. The operating margin widened from 23% to 25%. American Science & Engineering has $179 million of cash and $7.1 million of long-term debt.

Stock

: American Science & Engineering has appreciated 18% during the past year, lagging behind U.S. stock indices. It trades at a price-to-book ratio of 3, a 40% discount to the industry average. It's expensive based on projected earnings.

Consensus

: Of firms rating American Science and Engineering, three, or 43%, advocate purchasing its shares and four advise holding them.

Stifel Financial

(SF) - Get Stifel Financial Corp. Report

and

The Benchmark Co.

forecast that the stock will advance another 23% to $90.

-- Reported by Jake Lynch in Boston.