Investors may want to consider the following companies as they have grown their capital spending impressively over the past three years. This suggests these companies could expect a higher demand for their products and services in the future.
Furthermore, Wall Street sell-side analysts forecast that these stocks will increase their earnings per share significantly over the next five years.
GrowGeneration
The first company under consideration is GrowGeneration Corp. (GRWG, Financial), a Denver-based hydroponic and organic gardening retailer in the U.S.
The company allocated $2.23 million to the purchase of property and equipment in full fiscal 2019, marking an impressive growth from $260,000 spent in 2016.
Wall Street sell-side analysts forecast that GrowGeneration’s earnings per share will increase by 20% every year over the next five years.
Analysts also recommend a buy rating and have established an average target price of $8 per share.
The stock traded at $6.53 per share at close on Friday for a market capitalization of $251.63 million. The share price grew by almost 94% over the past year.
The stock has a price-book ratio of 4.28 versus the industry median of 1.24 and a price-sales ratio of 2.63 versus the industry median of 0.52.
Guidewire Software
The second company under consideration is Guidewire Software Inc. (GWRE, Financial), a San Mateo, California-based provider of application software products for property and casualty insurance companies worldwide.
The company purchased $44.92 million worth of property, plant and equipment in full fiscal 2019, which represented an impressive growth from $7.11 million invested in 2016.
Wall Street sell-side analysts predict that the earnings per share of Guidewire Software will grow by 14% every year over the next five years.
As of June, the stock has two strong buy recommendation ratings, five buy recommendation ratings and three hold recommendation ratings on Wall Street. The average target price is $120.20 per share.
The stock traded at $110.64 per share at close on Friday for a market capitalization of $9.2 billion. The share price rose by 9.4% over the past year.
The stock has a price-book ratio of 5.76 compared to the industry median of 2.89 and a price-sales ratio of 13.15 versus the industry median of 2.19.
R1 RCM
The third company under consideration is R1 RCM Inc. (RCM, Financial), a Chicago-based supplier of revenue cycle management services to U.S. health care operators.
R1 RCM allocated $61 million to the purchase of property, plant and equipment in full fiscal 2019 versus $12.6 million spent in 2016.
The company is now expected to increase its earnings by 30% every year over the next five years.
Wall Street sell-side analysts have also recommended a buy rating for this stock with an average target price of $13.88 per share.
The share price has fallen 16.3% over the past year to close at $10.59 per share on Friday for a market capitalization is $1.22 billion.
The stock has a price-book ratio of 56.92 versus the industry median of 2.54 and a price-sales ratio of 1.17 compared to the industry median of 1.65.
Disclosure: I have no positions in any securities mentioned.
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