What are the common attributes of a successful growth stock?
A successful growth stock starts with a successful growth company. A successful growth company starts with a vision, a vision for a new idea, a new product, a new service, anything that will change the way we do things, and create new demand. We look for that when we look for growth companies. We look for very strong management with that vision because, especially in consumer, once you have an idea, it's out there. It's on the internet. It's in a store, so it's hard to hide, and there maybe look-a-likes. But the companies that really succeed are the ones with the very strong management who have vision, who are able to execute, and have a financial plan that makes sense and propels the business forward.
Where do you see the strongest growth opportunities?
We see growth opportunities in a number of areas. First of all, being bigger and stronger is more important than ever because it takes a lot of investment to remain competitive in what's become a hyper-competitive market. For example, Home Depot, which is outpacing Lowe's for many, many years from a same stores sales perspective, really over the last nine years, and from a profitability perspective with a 500 basis point differential in profitability is now investing in a much more aggressive way to build its supply chain, its technology, its people, to better serve their customers, both individual and pros where the customer wants to be served, in the store, at the job site, online, et cetera. We also see very targeted specialty brands build their market share by changing the way people think about a category. A company like Canada Goose or Moncler have elevated outerwear and are growing very nicely and limiting their distribution so that it maintains their specialty nature, their pricing power, and their exclusivity. Those are some of the areas where we see growth.
Views as of 5- 23-2018 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Holdings named are for illustrative purposes only and do not necessarily represent holdings in any specific product. Federated Global Investment Management Corp. 18-74751 (6/18)