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Well said diana g! Couldn't agree more.
FORTUNE Ranks America's 100 Fastest-Growing Companies Technology, Oil Drilling Companies Dominate Annual List
NEW YORK, Sept. 8 /PRNewswire/ -- Technology and energy companies dominate FORTUNE's annual list of America's Fastest-Growing Companies, with Houston-based Noble Drilling taking the top spot with earnings-per-share growth averaging 394% annually over the past three years. By category, there were 26 technology companies on the list, followed by energy (22); industrial (20); retail (10); health care (8); and other (14, including financial services). The range of fastest-growing companies is a reminder, FORTUNE says, of the U.S. economy's diversity and depth. (See attached for complete list of Fastest-Growing Companies.)
FORTUNE notes the improbability of so many energy companies achieving the kind of growth necessary to make the list, with oil prices at a ten-year low and many oil stocks in the tank. But as FORTUNE writer Bethany McLean points out in "Investing Wisely in America's Fastest-Growing Companies," the list is based on three-year earnings growth, and three years ago energy company earnings were near a cyclical low. Then oil demand took off and was still high less than a year ago, with oil at more than $20 a barrel last fall. The price is now down around $13, but it took a while for the price drop to hit earnings -- so these companies still look good on three-year earnings growth. Their future is far less sunny, McLean warns; Global Marine (#1 on FORTUNE's Fastest-Growing list last year), warned in August that it would miss earnings. The stock, which sold at a 52-week high of almost $37, recently traded at $12. The stock prices of the energy companies on this year's list have fallen 42% on average over the past 12 months, to an average P/E of just 11 times earnings. On the positive side, FORTUNE also notes that oil prices are likely to come back eventually, which is why a handful of investors are quietly buying oil service company stocks that have dived recently.
The strength of the technology sector is a bit easier to explain, although the number of tech companies on the list has dropped steadily since the peak of 38 in 1996 (down to 35 in 1997). The tech sector of the list may be shrinking, FORTUNE's Edward Robinson writes, but it's hardly on the skids. For example, the list boasts chipmakers, information technology consultants, an Internet switch maker, and a wireless company. And in terms of stock performance, the leader on the list is -- no surprise -- Dell Computer (No. 43), with a 177% one-year price change; it stands a strong chance of becoming the best-performing equity in the S&P 500 in the 1990s.
FORTUNE also explores the necessity of managing growth wisely by analyzing the styles of three companies on the list: Noble Drilling, one of the largest offshore drillers in the world (No. 1); Funco, the nation's largest retailer of used videogames (No. 2); and circuitboard maker Jabil Circuit (No. 6).
At Noble, the challenge was to make the offshore operations more uniformly efficient and trouble-free, which involved "cutting egos down to size" and instituting a standardized system of hiring and promotion under the guidance of CEO Jim Day and Roy Rhodes, Vice President of Organizational Development. At Funco, company growth depended in part on the CEO improving his own management style; as the veteran of two failed business startups, David Pomije had learned a lesson from trusting only himself to make every important decision. "My philosophy was: 'I'm the boss, you work for me,' " Pomije, 41, says. Today, his management style is totally different: self-importance is out, and hiring experienced people to share the load with is in.
Jabil Circuit faced another challenge: the belief that the company as a whole could pull off anything it tried, a belief that, for a while at least, was well founded. After an ultimately unsuccessful attempt to actually design, build, and manufacture an entire computer, instead of just the parts, CEO Bill Morean and his team started a process to evaluate future projects. There would be no more assuming that Jabil could accomplish anything it attempted; projects would be assessed from a standpoint of the company's capabilities and weaknesses.
FORTUNE's list was compiled by Zacks Investment Research by looking at earnings-per-share growth over three years, using a moving four-quarter sum. No company could make the list if it had a loss over the past four quarters or annual growth revenue of less than 30%.
Rounding out the top ten of the Fastest Growing Companies are:
-- Marine Drilling, No. 3: building on the best yearly earnings in company
history, this shallow-water driller has beefed up its presence in the
Gulf of Mexico;
-- Vitesse Semiconductor, No. 4: its name is the French word for "speed,"
it makes chips out of fast-acting gallium arsenide, and it can't make
them fast enough;
-- Central Garden and Pet, No.5: on an acquisition binge, this
lawn-and-pet-products distributor bought Four Paws, a top distributor
of pet products, in 1997;
-- Cliff's Drilling, No. 7: a third of its oil goes to Corpoven, a
state-owned Venezuelan oil company. It's selling its 34 rigs to
industry giant R&B Falcon;
-- PairGain Technologies, No. 8: still waiting for that fiber-optic cable?
PairGain's systems have turned old-fashioned copper wires into a fast,
wide-band medium;
-- RMI Titanium, No. 9: more than 75% of sales are to the aerospace
industry, but new long-term contracts should help counter its
cyclicality. RMI is also developing new uses for titanium;
-- Sanmina, No. 10: this contract manufacturer to the electronics industry
holds the hand of fast-growing customers from the design stage all the
way through production.
The September 28 issue of FORTUNE is on newsstands beginning September 14.
FORTUNE RANKS AMERICA'S 100 FASTEST-GROWING COMPANIES
September 28, 1998
Earnings Per Share
RANK COMPANY Annual Growth LOCATION
Rate (%)
1 NOBLE DRILLING 394 Houston, TX
2 FUNCO 276 Eden Prairie, MN
3 MARINE DRILLING 268 Sugar Land, TX
4 VITESSE SEMICONDUCTOR 227 Camarillo, CA
5 CENTRAL GARDEN & PET 206 Lafayette, CA
6 JABIL CIRCUIT 200 St. Petersburg, FL
7 CLIFFS DRILLING 200 Houston, TX
8 PAIRGAIN TECHNOLOGIES 187 Tustin, CA
9 RMI TITANIUM 180 Niles, OH
10 SANMINA 179 San Jose, CA
11 UTI ENERGY 174 Houston, TX
12 VERITAS DGC 174 Houston, TX
13 FIDELITY NATIONAL FINANCIAL 167 Irvine, CA
14 WASTE MANAGEMENT 166 Houston, TX
15 TJX 161 Framingham, MA
16 K V PHARMACEUTICAL 157 St. Louis, MO
17 BIOGEN 156 Cambridge, MA
18 GLOBAL MARINE 151 Houston, TX
19 SALTON/MAXIM HOUSEWARES 143 Mount Prospect, IL
20 CKE RESTAURANTS 142 Anaheim, CA
21 SHAW GROUP 136 Baton Rouge, LA
22 DSP COMMUNICATIONS 127 Cupertino, CA
23 MODTECH 124 Perris, CA
24 NOBLE AFFILIATES 117 Ardmore, OK
25 CANDIE'S 116 Purchase, NY
26 RAINFOREST CAFE 113 Hopkins, MN
27 OMEGA HEALTH SYSTEMS 113 Memphis, TN
28 REXALL SUNDOWN 111 Boca Raton, FL
29 WET SEAL 108 Foothill Ranch, CA
30 ST. MARY LAND & EXPLORATION 104 Denver, CO
31 SEACOR SMIT 104 Houston, TX
32 PRESSTEK 103 Hudson, NH
33 CADE INDUSTRIES 103 Okemos, MI
34 IMPERIAL CREDIT INDUSTRIES 100 Torrance, CA
35 ENSCO INTERNATIONAL 98 Dallas, TX
36 BJ SERVICES 98 Houston, TX
37 PACIFIC SUNWEAR OF CALIFORNIA 98 Anaheim, CA
38 ALLIED RESEARCH 97 Vienna, VA
39 TECHNOLOGY SOLUTIONS 91 Chicago, IL
40 VWR SCIENTIFIC PRODUCTS 91 West Chester, PA
41 NBTY 90 Bohemia, NY
42 PARKER DRILLING 90 Tulsa, OK
43 DELL COMPUTER 90 Round Rock, TX
44 PETROLEUM DEVELOPMENT 90 Bridgeport, WV
45 CHART INDUSTRIES 88 Mayfield Heights, OH
46 INDUSTRIAL HOLDINGS 88 Houston, TX
47 ACTRADE INTERNATIONAL 86 New York, NY
48 CORRECTIONS CORP. OF AMERICA 84 Nashville, TN
49 YORK RESEARCH 83 New York, NY
50 U.S. OFFICE PRODUCTS 82 Washington, DC
Earnings Per Share
RANK COMPANY Annual Growth LOCATION
Rate (%)
51 ASCEND COMMUNICATIONS 81 Alameda, CA
52 ACCESS HEALTH 80 Broomfield, CO
53 PLAINS RESOURCES 80 Houston, TX
54 REMEDY 78 Mountain View, CA
55 ZOLTEK 78 St. Louis, MO
56 RENT-WAY 76 Erie, PA
57 PRIDE INTERNATIONAL 75 Houston, TX
58 CHRONIMED 75 Minnetonka, MN
59 CHS ELECTRONICS 74 Miami, FL
60 HOLOGIC 74 Waltham, MA
61 PEOPLESOFT 73 Pleasanton, CA
62 NABORS INDUSTRIES 71 Houston, TX
63 TRANSACTION SYSTEMS ARCHITECTS 71 Omaha, NE
64 SEROLOGICALS 70 Clarkston, GA
65 DEVON ENERGY 70 Oklahoma City, OK
66 VARCO INTERNATIONAL 70 Orange, CA
67 NATIONAL RV HOLDINGS 70 Perris, CA
68 ABR INFORMATION SERVICES 70 Palm Harbor, FL
69 DAVOX 69 Westford, MA
70 DYCOM INDUSTRIES 68 Palm Beach Gardens, FL
71 STEWART INFORMATION SERVICES 68 Houston, TX
72 GENCOR INDUSTRIES 68 Orlando, FL
73 TECHNITROL 68 Trevose, PA
74 QUALCOMM 67 San Diego, CA
75 ACTION PERFORMANCE 67 Phoenix, AZ
76 SEMTECH 66 Newbury Park, CA
77 INTERSTATE BAKERIES 66 Kansas City, MO
78 BELLWETHER EXPLORATION 66 Houston, TX
79 ASYST TECHNOLOGIES 64 Fremont, CA
80 CIBER 63 Englewood, CO
81 AIRTOUCH COMMUNICATIONS 61 San Francisco, CA
82 COLUMBIA BANKING SYSTEM 61 Tacoma, WA
83 DATUM 61 Irvine, CA
84 MASTEC 61 Miami, FL
85 INNOVEX 61 Hopkins, MN
86 AMERICAN ONCOLOGY RESOURCES 60 Houston, TX
87 CONSOLIDATED GRAPHICS 60 Houston, TX
88 TRANSOCEAN OFFSHORE 60 Houston, TX
89 TSR 60 Hauppauge, NY
90 ACCUSTAFF 59 Jacksonville, FL
91 SLI 59 Canton, MA
92 REPUBLIC INDUSTRIES 59 Ft. Lauderdale, FL
93 DOLLAR TREE STORES 58 Chesapeake, VA
94 DUCOMMUN 57 Long Beach, CA
95 SWIFT ENERGY 57 Houston, TX
96 COMPUWARE 57 Farmington Hills, MI
97 CDW COMPUTER CENTERS 56 Vernon Hills, IL
98 ALTERA 55 San Jose, CA
99 BIO-TECHNOLOGY GENERAL 55 Iselin, NJ
100 PRE-PAID LEGAL SERVICES 55 Ada, OK |
