Investors always want to find stocks to buy in new, innovative companies that can change the world with their products and services. And sure — I have owned a few of those revolutionary stocks over the years, and when they work they can indeed rack up incredible profits. Unfortunately, all too often the story around these miracle companies is false, and things do not work out as well as we had hoped.
You find great stocks by sticking to the numbers — and not all of the best stocks to buy are in the most exciting industries. In fact, I have found over the years that many of my biggest gainers have been companies that are in boring, basic businesses. The business may be boring, but management’s execution is exciting. These three companies exhibit the type of sales and earnings growth that are the hallmarks of great stocks to buy.
Boring Stocks to Buy: Federated National Holding (FNHC)
Federated National Holding (FNHC) sells property and casualty insurance with an emphasis in homeowners insurance in Florida. FNHC also sells other polices like commercial general liability, federal flood and personal auto insurance. Are you still awake? You’ll want to hear why FNHC is the first of these great stocks to buy.
Nothing about the insurance industry is new, exciting or ground-breaking, but the folks at Federated National are really good at what they do. Earnings are up 168% this year, and Federated National has been blowing away the analysts’ estimates. For the past three quarters, Federated National had positive earnings surprises of 85%, 48% and 65%, respectively.
Portfolio Grader has ranked FNHC stock a “strong buy” for a year now, and the fundamentals just keep getting better.
Boring Stocks to Buy: Trinity Industries (TRN)
Trinity Industries (TRN) is also in a really mundane industry. Trinity makes railroad cars like auto carriers, boxcars and tank cars. Also, Trinity leases railcars to railroads and shippers. Trinity has a construction division that makes things like guard rails and an energy division that manufactures wind towers and lighting structures.
While none of these businesses exactly gets the blood racing, the profit growth of Trinity industries is enough to get investors’ hearts beating a little faster. In the most recent quarter, Trinity had sales growth of 56%, and profits were up more than 200% year over year.
Analysts have been asleep at the switch — Trinity has posted four consecutive positive earnings surprises. Portfolio Grader raised TRN stock to an “A” back in April, and the continual improvement in the fundamentals makes Trinity Industries a “strong buy” at the current price.
Boring Stocks to Buy: BSB Bancorp (BLMT)
Now that the credit crisis is behind us, small-town banking is back to being a pretty boring business. BSB Bancorp (BLMT) is the holding company for Belmont Savings Bank in Massachusetts and has six branches in southeast Middlesex County. While community banking is not a re-invention of the wheel, the numbers BSB Bancorp is putting up would make most tech executives green with envy.
BLMT is included in these BSB Bancorp tripled its earnings in the second quarter from year-ago levels, and earnings for the first two quarters of 2014 doubled those of the first half of 2013. Total assets were up more than 15% while deposits grew by more than 16%. Banking is nothing special, but BSB Bancorp’s execution is extraordinary. Portfolio Grader upgraded BLMT stock to an “A”‘ back in February, and BLMT stock is definitely a stock to buy at the current price.
Sometimes the most exciting stocks to buy are in the most boring businesses.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.