9 Growth Stocks With Lots of Firepower

The bull market is now in its 10th year, stock valuations are near historic highs, economic growth may be peaking, interest rates are on the rise, and growing trade conflicts present their own set of uncertainties. To find promising equity investments in this environment, Tom Plumb, manager of the Plumb Balanced Fund (PLBBX), has a simple prescription. As he told Barron's: "If stocks are better for returns than bonds, then you should look for stocks with the best total return—growth companies."

In particular, Plumb prefers companies that are riding "major secular trends," as Barron's puts it. Among the companies that his fund owns, and which he discussed with Barron's, are:

Source: Yahoo Finance for market values as of June 28.

Fund Performance

The Plumb Balanced Fund has a five-star rating from Morningstar Inc. Its peer group is balanced funds with equity allocations between 50% and 70%, and Morningstar finds that it has been in the top 1% of this category for the past one-, three-, five-year periods, through June 27. As of March 31, the fund had 55% of its portfolio in U.S. stocks, and 8% in non-U.S. stocks. (For more, see also: 5 Stocks to Outperform in 2018's Volatile Market.)

The fund also has better upside capture ratios and downside capture ratios than its peers over those same time periods. That is, it tends to be up more than its peers in up markets, and down less than its peers in down markets.

Mobile Payments Trend

Noting that 23% of the transactions in China that move money between individuals and businesses are now performed through a mobile device, Plumb sees much room for growth in the U.S., where the figure is only 9%. He sees Visa as both a "driver" and an "enabler," and expects its margins to expand pursuant to its acquisition of Visa Europe. He notes that PayPal also is active in driving increased volumes of mobile payments.

The Amex Ruling

While a recent Supreme Court decision technically was a victory for American Express Co. (AXP) over rival card issuers such as Visa, it actually may help to entrench established players such as Visa and their fees against potential upstarts, The Wall Street Journal reports. As described by American Banker, the Obama administration and 11 states had sued American Express over anti-competitive provisions in its contract with merchants. Amex bars retailers that accept its card from encouraging customers to use, where possible, other cards with lower fees, such as Visa, Mastercard or Discover. (For more, see also: The Bull Market Will Last Another Decade: Fundstrat.)

Bookings Are Up

Plumb indicates that Booking, the parent of Booking.com, Priceline.com, Rentalcars.com, KAYAK and OpenTable, has a particular competitive advantage in Europe, where it has set up reservation systems for independent hotels and inns. In the U.S., by contrast, he notes that the hotel business is dominated by major chains that have their own highly sophisticated reservation systems. He indicates that Booking is expanding in the U.S. and other large markets, and that he likes the management.