Prospect Capital Corporation (NASDAQ:PSEC) sports a five-year average annual revenue growth rate of 45% and a net profit margin of 48.4%. Prospect is a private equity business development company (“BDC”), specializing in energy companies, and recently yielding close to 12%. Its earnings jumped significantly recently, and it has been busy making many new investments. A risk it faces is that of companies defaulting, but its default rate has been low and Prospect is not that leveraged, overall, compared to some peers. It has been issuing a lot of shares, though, which concerns some, but my colleague Tim Beyers has supported the move.
Seadrill Ltd (NYSE:SDRL) sports a five-year average annual revenue growth rate of about 21% and a net profit margin of 23.1%. One of the world’s largest oil and gas offshore drillers, it carries substantial debt, but also sports a massive backlog of topping $21 billion and operates in the most profitable deepwater drilling regions, among other locations. Bears don’t like its negative free cash flow , but that’s been moving in the right direction, and in the meantime, the company pays a hefty 9% dividend yield and is expanding its fleet.
Intuitive Surgical, Inc. (NASDAQ:ISRG) sports a five-year average annual revenue growth rate of 29% and a net profit margin of 30.1%. Intuitive is the leader in robotic surgical equipment, and there’s much to like about it, such as its repeating revenue from service contracts and supplies. Here’s a concern, though, that recently sent shares downward: Some studies suggest that robot-assisted surgeries may not be much more effective than traditional ones. (Some of these studies ignore the faster recovery times for less-invasive procedures.) The company has been trying to appeal more directly to doctors and hospitals lately. A new tax on medical devices will squeeze Intuitive Surgical, Inc. (NASDAQ:ISRG)’s bottom line a bit, but it has the earnings to handle it — and, on the plus side, the tax is likely to hurt its less profitable or unprofitable peers more.
Fat profit margins and heady growth are a nice combination. Just be sure to check out other numbers and factors as well before investing. Make sure you’re keeping your money in your best ideas.
The article 5 Fast-Growing Profit Gushers originally appeared on Fool.com and is written by Selena Maranjian.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Google, Baidu, Intuitive Surgical, Silver Wheaton. (USA), and Seadrill. The Motley Fool recommends and owns shares of Baidu, Google, Intuitive Surgical, and Seadrill.
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