Research Total Return Leaders
Based on compounded annual price appreciation and dividends for the 10-year period ending Nov. 13, 2008, for stocks trading at or above $2 a share:
- Alberto Culver Co. (+14.7%)
- Corporate Office Properties Trust Inc. (+20.3%)
- Cubist Pharmaceuticals Inc. (+26.4%)
- Varian Medical Systems Inc. (+24.6%)
Source: S&P Compustat
Standard & Poor’s Compustat data is used by institutional money managers and analysts around the world. With fundamental and market data on 88,000 global securities, Compustat provides vital company, index and industry information that supports financial models and proprietary company and industry analysis. See CompustatResources.com.
When the markets get tough, the best performers get even tougher.
That’s the lesson offered by some of the best companies measured by S&P Compustat for their price appreciation and dividends.
Some high-growth companies are able to join the ranks of total return leaders through stock-price appreciation alone, while more reasoned firms are able to be members of this elite group via a combination of stock-price appreciation and dividend growth. And regardless of how firms achieve their total returns, consistency in performance is a hallmark of successful investments that create wealth over time, experts note.
Investments That Count
Companies can come through for investors by consistently making products and services with stable demand and seeking out new growth avenues.
One such firm is Lexington, Mass.-based Cubist Pharmaceuticals, a biopharmaceutical company focused on developing and commercializing anti-infective therapies for the acute-care environment. How has Cubist produced 10-year total returns of 26.4 percent? It comes down to making the write investments and executing on those investments.
“In 1997, Cubist in-licensed the compound that we then developed and commercialized, following FDA approval, in 2003 as the IV antibiotic Cubicin (daptomycin for injection),” says CFO David McGirr. “Cubicin has become a very important therapy in the war against the ‘super bug’ MRSA (methicillin resistant Staphylococcus aureus), which is a bacteria that causes serious, sometimes life-threatening infections.
“On the strength of the continued revenue growth of Cubicin (up 45 percent vs. year-ago U.S. net revenue in our most recently reported quarter), Cubist now has been GAAP profitable for nine consecutive quarters,” McGirr adds.
Elisha Finney, corporate senior vice president and chief financial officer, Varian Medical Systems, says that the company’s technology cycles have produced its total returns. “We are really a high-tech company, and six percent of sales has gone to R&D in the past nine years. We’ve done a lot of our research on software, which improves both our gross and operating margins. And we’ve grown our R&D dollars even in recessions.”
Varian Medical Systems, based in Palo Alto, Calif., makes medical devices and software used to treat cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. In addition, it makes informatics software for managing comprehensive cancer clinics, radiotherapy centers and medical oncology practices, and the company produces tubes and digital detectors for X-ray imaging as well as specialized imaging products for cargo screening and non-destructive testing.
“We have taken our pre-tax margin from 11 percent to 20 percent with more software and higher sales and by making sure we get plenty of leverage on our corporate expenses. This allows us to grow the bottom line,” explains Finney. “We also have very good asset management and low working-capital requirements. This is in part because we get significant down payments from clients, about 10 percent per order. Last year, we averaged about $90 million a quarter in cash flow from operations.”