NEW YORK ( TheStreet) -- Just how much correlation is there between earnings growth and stock price appreciation?In 2012, Fortune Magazine named Catamaran Corp. ( CTRX) the 12th-fastest growing company in America. It listed Catamaran's revenue growth at 72% per year (three-year average), and profit growth at 52% per year. Now let's check the returns to shareholders:
Furthermore, when I take next year's EPS estimate of $2.34 per share and extrapolate them over the next five years at 30% per year, I come up with a fairly large number. When I apply what I consider to be an appropriate multiple to those future EPS forecasts, I get a five-year target price of just over $105 per share. This is still more than double where the shares are today. In other words, I can still justify this stock from a valuation point of view. Performance and valuation are two pieces of a three-part puzzle for me. The third piece is the stock chart. I like a good, healthy stock chart.
I see very little to not like in the current three-year stock chart of Catamaran. Overall, when I compare the stock against the other 3,278 stocks that I follow, it gets an overall grade of "A-." I only like to buy "A-" stocks or better. Catamaran is one of the better large-cap stocks in the market right now. Bu, as always, stay vigilant. Clients of Gunderson Capital Management are long the stock. Data from Best Stocks Now App Follow @pwstreet This article was written by an independent contributor, separate from TheStreet's regular news coverage.