Fisher reported a position of 2.7 million shares in PAREXEL International Corporation (NASDAQ:PRXL), a clinical research and trials services company with a market capitalization of $2.7 billion. In its most recent quarter PAREXEL recorded revenue and earnings growth of close to 30% compared to the same period in the previous fiscal year. Markets expect sustained growth, and have bid up the stock price to the point where PAREXEL trades at 33 times trailing earnings; while performance has been strong, we’d want to see the multiple come down before considering it as a growth stock.
Rounding out our list of Pacific regional bank and private investor SVB Financial Group (NASDAQ:SIVB). The “SVB” stands for “Silicon Valley Bank” reflecting the emphasis on providing financing for technology and tech related companies. The stock is valued at 19 times earnings, whether we compare the $3.4 billion valuation to trailing results or sell-side forecasts for 2014. This is despite significant growth on both top and bottom lines in Q1 2013 versus a year earlier, and we’d be interested in looking into the source of those improvements.
Fisher’s small cap picks are generally succeeding in terms of delivering high earnings growth in recent quarters, though as a consequence they generally trade quite a bit above value territory. We’re worried that Cabela’s is exposed to the risk of gun sales remaining at high levels or even declining, rather than growing further. As we’ve mentioned, we’d have some interest in looking into SVB Financial though we’d note that normally optimistic analysts are forecasting little growth at the bank. The other three stocks certainly have potential but just seem too pricey at this time for us to recommend buying.
Disclosure: I own no shares of any stocks mentioned in this article.