There’s also the possibility that smartphones may have hit saturation. Asymco (via Businessinsider) predicts that smartphones will make up 80% of the U.S. phone market by August next year. If smartphone growth has peaked, it’s hard to see how much growth is left in Qualcomm.
Whole Foods will benefit from a secular trend
Ward argues for Whole Foods on the grounds that the company represents a growing secular trend, namely that people increasingly “care about what they eat.”
Ward believes the company will triple its store count, and likes the impressive growth Whole Foods has experienced.
There are two issues with Whole Foods. The first is the company’s valuation: Whole Food’s (NASDAQ:WFM) price-to-earnings ratio of 32.5 is nearly double that of the S&P 500’s.
The second issue is the possibility that the organic food craze may prove to be somewhat of a fad. Several scientific studies have cast doubt on the supposed benefits of eating organic, including this Stanford study from last fall.
However, if investors believe eating organic is here to stay, and can live with Whole Food’s valuation, it might be a solid pick.
Starbucks is a global growth story
Ward likes Starbucks Corporation (NASDAQ:SBUX) as a play on global growth. Starbucks has been aggressively expanding overseas, and Ward likes the company’s growth in markets such as China, India, Vietnam and Korea. Ward also believes the company can continue to grow in the US.
The question here is really one of viability of Starbucks’ model on a global basis. Can Starbucks, like McDonald’s before it, become a staple bastion of American culture in markets across the globe?
If investors believe the company can convince Vietnamese and Indian consumers to pay $5 for a latte, then perhaps Starbucks Corporation (NASDAQ:SBUX) makes sense as a growth investment.
Playing Ward’s picks
Frankly, none of these picks are shocking. In fact, Ward’s logic for these stocks is fairly well established in the investment community. Consequently, they might not offer the sort of upside investors are looking for when they think of “growth stocks.”
All of these companies have fairly well-established businesses, so risk is likely limited. But investors looking for growth might want to look elsewhere.
The article 4 Growth Picks from GAMCO’s Howard Ward originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
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