8 Stocks To Bank On

with an eye for growth are often willing to pay for higher multiples but only if a company’s growth rate exceeds its P/E. So while we screened for companies projected to increase earnings at least 20% on average over the next five years, we also made sure their growth rate was at least 20% above their P/E at the time.

When we looked at the market in late May, many growth companies had been neglected during a rally that saw large-cap stock prices increase greatly. That helped our two picks, 3Com Corp. (Nasdaq: COMS) and Cabletron Systems (NYSE: CS) rise to the top. Both companies are key players in computer networking, an industry enabling laptop and desktop units to communicate. 3Com, which analysts predict is headed toward 31% annual growth the next five years, looked particularly attractive priced at 18.6 times 1997 earnings. Cabletron, a company analysts see growing earnings at a 24% dip, looked too cheap to pass up at 16.6 times 1997 predicted net income. One very difficult decision was to place Cisco Systems (NYSE: CSCO), the networking industry’s undisputed leader, in our runners-up bin. Analysts peg Cisco to boost earnings almost 34% a year but, unfortunately, the investment world is keen on that same goal. Cisco shares, as of this writing, wer
e trading at a 30 multiple, allowing the company to make our screen, but still making it a bit pricier than our other two choices.

TAKING THE DATA TO THE BANK
In parting, we leave you with two good sources of stock company information. Should you want to check up on the stocks we’ve chosen, or even comb through screens of your own, you’ll find that the freshest, most extensive data available is indispensable. One Web site chock-full of company-specific facts and figures (and even magazine articles) is www.dailystocks.com. And if you’re looking for the same annual and quarterly documents corporations must submit to Uncle