Ever increasing energy costs, along with the slowdown in the housing industry in the past, have forced investors to think about capital appreciation for their investments and invest in stocks that are less affected by such economic imbalances. This situation proved to be advantageous to large cap growth stocks. They took benefited from prevalent lower interest rates and attracted investors looking for long-term capital appreciation.
One of the investment management firms that invests using the same ideology is Kornitzer Capital Management Inc. (KCM). In its recently disclosed 13F filings it made 25 new positions, including companies like Hibbett Sports, Infoblox Inc, Insulet Corp, Realpage Inc, Microchip Technology Inc. Screening its portfolio, I have picked up three stocks from KMC’s portfolio in which it has increased its investment by more than 100% as per its recent filings. I expect that these companies will take advantage of the low interest rates for their growth and save investors from the impact of inflation with expected higher returns. Let’s have a look at these stocks individually.
|Companies||% change in position|
|Cerner Corporation (NASDAQ:CERN)||384.00%|
|Kansas City Southern (NYSE:KSU)||144.00%|
|Walgreen Co (NYSE:WAG).||1107.00%|
Source – Whalewisdom.com
Cerner Corporation (NASDAQ:CERN)
Cerner Corporation recently reported its 4Q and also full year earnings for FY 2012. The total revenue of the company has jumped by 21% to $2.67 billion for the full year from $2.20 billion in 2011. The revenue growth was mainly due to record bookings of 1.02 billion, which increased by 13% y/y. The free cash flow for the quarter was at a record ~$424 million, which was up by ~18% y/y. These figures clearly depict a solid performance by the company this quarter.
What lies ahead?
Cerner’s main markets include the US, Canada, the UK, Australia, Spain, and France. In order to further increase its footprint Cerner has been focusing on the Middle East, and the company recently signed an agreement with King Saudi University. Under this agreement it will provide electronic health record (EHR) systems for two of their hospitals, namely King Khalid University Hospital and King Abdulaziz University Hospital. In the coming 18-20 months, both university hospitals shall provide 30 EHR systems. And as per the management guidance, this agreement will bring drastic revenue growth for Cerner in the coming years.
Furthermore, Cerner’s current customers are indicating positive signals for its future growth. Almost all the customers, including Bayfront Medical Center, Carolinas Healthcare System, and Casa Grade Regional Medical Center, are on track with Cerner for their HIT requirements. I expect these clients will increase their HIT spending by 6.7% in the next year, along with the new business bookings, which are expected to be in the range of $720 million – $760 million in 1Q13.
I believe Cerner will witness long-term growth opportunities in the field of Healthcare IT, and therefore I recommend buying this stock.
Kansas City Southern (NYSE:KSU)
Recently, Kansas reported strong 4Q12 results that were in line with market expectations. The company posted an operating income of $174 million, a decent 15% increase from the corresponding same quarter in the last year. This was mainly due to tremendous revenue growth in its automobiles, chemical, petroleum, and inter-modal lines of business.