Taiwan Semiconductor Mfg. Co. Ltd. (TSM), Yahoo! Inc. (YHOO) & Walgreen Company (WAG): Three Hidden Gems for the Next Five Years

Convenience a great commodity

Walgreen Company (NYSE:WAG) has a lot of earnings growth potential going forward as the company has plans of growing its store footprint through using leverage. The company plans to increase its debt load to $11 billion from its current $5.3 billion in order to increase the amount of revenue it can earn. It also plans to increase its capital expenditure spending, as well. The company plans to grow its revenue by 80.5% through 2016. Walgreen Company (NYSE:WAG) also plans to increase its operating income by 131% over the same period.

Over the past five years, the company has been able to grow revenue by 21.3%. It grew earnings per share by approximately 11.5% over the past five years. So if Walgreen is able to pull this off, it’s going to be disruptive in nature, and will throw off any historically driven earnings growth-rate projection that analysts have on the stock.

Assuming Walgreen Company (NYSE:WAG) is successful at this, then it is a lucrative investment opportunity. The stock trades at a 14.8 earnings multiple, but with the company hoping to double operating income in a span of just three years, the stock is actually really cheap. Walgreen also compensates investors with a 2.5% dividend yield.

Conclusion

I believe that investors should buy Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) as the company has the most growth potential of the three companies. Yahoo! Inc. (NASDAQ:YHOO) will grow earnings the fastest of the three as there is very little overhead needed to run a website, a lot of the internal functions of the company can be outsourced to third- party content creators, and the amount of web-development could be reduced to even smaller teams. Finally, I believe that Walgreen Company (NYSE:WAG) — if it were to deliver upon its plans for rapid growth — could turn into a significant investment opportunity.

The article Three Hidden Gems for the Next Five Years originally appeared on Fool.com.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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