A great place to look for new stock ideas is in Credit Suisse Group AG (ADR) (NYSE:CS)‘s “Focus List.” The Focus List has outperformed the S&P 500 in 6 of the past 9 years, sometimes by a wide margin.
Here are a few names recently added to the investment banks list; according to Credit Suisse Group AG (ADR) (NYSE:CS), these stocks are worthy of buying right now.
Hungry for growth
Credit Suisse Group AG (ADR) (NYSE:CS) added Agrium Inc. (USA) (NYSE:AGU) to the focus list on March 1. This company has had a wonderful run of late. Earnings and revenue have grown and amazing 25% over the past five years for Agrium, putting them in truly selective company.
So with the incredible multi-year performance, why is now such a good time to buy Agrium? Well, the company’s growth has accelerated as of late, but it’s more than just that.
Agrium Inc. (USA) (NYSE:AGU) is a producer of agriculture nutrients and other agriculture products, so its success rides on crops. The stock price has pulled back over 25% from its 52 highs, but the long-term outlook for agriculture is still strong. Commodity prices have slumped due to unfavorable weather conditions hampering prices for crops such as corn — but that won’t last forever.
Agrium Inc. (USA) (NYSE:AGU) has shown that it can outpace other agriculture names in any market, so as the world’s population increases beyond 7 billion, this stock should perform well. The long-term trends favor this one; it could be worth buying on a dip.
Banking on returns
Discover Financial Services (NYSE:DFS) is on an absolute tear. The stock has rallied from about $5 in 2009 to nearly $50 today, but there’s still room to run. Around late 2009, Discover won a court ruling against MasterCard and Visa for damages that prohibited the aforementioned lenders from working in collusion. This, in my opinion, opened the consumer credit market to Discover and made it a three-name game. Discover is accepted nearly everywhere these days, and it’s using that increased exposure to do some very big things.
It’s no surprise to me that Credit Suisse Group AG (ADR) (NYSE:CS) added Discover Financial Services (NYSE:DFS) to the focus list on March 5 of this year. Discover has an awesome business model, and it all starts with the cards. Even through the recession of 2008, consumers kept paying their credit cards. Studies showed that consumers tend to pay their cards before all other bills, including their mortgages. This matters because Discover Financial Services (NYSE:DFS) tries to add a lot of new customers by giving away freebies on its cards, so it really can’t afford delinquencies.
With all those new customers, Discover is now banking on building a business model beyond cards. While Discover may give away the farm on its card business, giving customers 5% cash back on purchases, every card customer that goes over to another of Discover’s services is nearly pure profit. For example, when Discover Financial Services (NYSE:DFS) lends a mortgage, it doesn’t have the same expenses (real estate, staff, etc.) that a Bank of America office would.
Investors should track Discover’s continued ability to convert new card members over to other banking services. If it can do so, the company’s growth should continue.
Sharp-dressed profits
If you’re a man, and you’ve purchased a shirt recently, you probably bought it from PVH Corp (NYSE:PVH). This company’s business model takes advantage of a tactic I call “the illusion of choice.” Whether you buy a shirt from Calvin Klein, Van Heusen, IZOD, or Hilfiger, it all goes into PVH’s coffers. This allows PVH to enjoy a near monopoly while still allowing customers to believe that they’re being picky.
Credit Suisse added this apparel powerhouse to the Focus List on April 29, and for good reason. Revenue has grown 20%, and earnings 12.83%, over the past five years. The company has also seen stronger earnings lately, with the most recent quarter showing a beat of $1.60 vs. expectations of $1.50/share.
In the stock market, a lack of competition is a great thing. I think PVH makes sense right now and going forward. The illusion of choice is alive and well with this retailer!
Focus, focus, focus
Does it make sense to “copy” Credit Suisse Group AG (ADR) (NYSE:CS)’s Focus List? The track record certainly would suggest so. But I think these recent additions should be purchased before other Focus List names, because of their underlying fundamentals.
All three of these companies make sense right now. Agrium has megatrends at its back, Discover has a wonderful business model, and PVH has significant market share.
Adem Tahiri has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article 3 New Stocks on Credit Suisse’s Focus List originally appeared on Fool.com.
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