Rocky Mountain Highs
Fast growers in the West.
Because of a population boom during the past 15 years, an eight-state expanse stretching from New Mexico to Montana has become "an incubator for many young, fast-growing, emerging companies," says Barbara Walchli. She should know. She runs Aquila Rocky Mountain Equity (symbol ROCAX; 800-437-1020; 4.25% sales charge), a fund that invests in companies based in the region. Over the past three years to February 1, the fund returned an annualized 21%. Walchli's favorites include:
First State Bancorp (FSNM). "Not your typical bankers" is one of this Albuquerque company's slogans. The 50 branches of its First Community Bank unit reflect that motto with their colorful, pueblo-style buildings. First State, which operates in Arizona, Colorado, New Mexico and Utah, is aggressively expanding through acquisitions. At $26, the stock sells for 17 times the $1.50 per share that analysts expect the company to earn in 2006, according to Thomson First Call.
Knight Transportation (KNX). Inhabitants of the Rockies are known for their resourcefulness, and the Knight family is no exception, says Walchli. Two sets of cousins launched this Phoenix trucking company in 1989. "These guys are hard-charging and extremely focused on using their assets efficiently and effectively," Walchli says. The company hauls dry and refrigerated consumer goods to supermarkets and other outlets throughout the U.S. Revenues hit $567 million last year, a 28% jump from '04. The stock, at $20, sells for 23 times estimated 2006 earnings of 86 cents a share.
Microchip Technology (MCHP). This Chandler, Ariz., semiconductor maker is "one of the best-run tech companies anywhere," says Walchli. It makes microcontrollers, devices that provide intelligence for a wide range of products, such as keyless-entry systems for cars. Over the past five years, sales have grown at a compounded annual rate of 12%. Microchip has virtually no debt and nearly $1 billion in cash on its balance sheet, which allows it to return money to shareholders. Since 2002, Microchip has lifted dividends 11 times -- "almost unheard of in this industry." At $36, the stock sells for 24 times estimated profits of $1.48 a share for the year ending in March 2007.
Myriad Genetics (MYGN). This young Salt Lake City company creates tests to identify people who are at risk for various forms of cancer because of their genetic makeup. Revenues totaled $82 million for the fiscal year ending last June and since 2000 have grown at a compounded rate of 19% a year, driven by demand for tests that assess risks for melanoma as well as breast, ovarian and colon cancers. The stock's appeal doesn't rely on current profits because there are none. Analysts forecast that Myriad will lose $1.14 per share in the fiscal year ending this June. The stock, which hit a high of $129 in 2000, trades at $25.