Three Secular Growers For 2012

Given the very weak economy both domestically and in much of the developed world, investors may be interested in looking at secular growth stories which have been performing well despite the macro headwinds. Unlike highly cyclical stocks, these names have been able to thrive in the current atmosphere due to high growth rates stemming from strong execution in less than mature markets. Among the most successful secular growth stories in the stock market right now are Chipotle CMG, Panera Bread Company PNRA and Under Armour UA. Below, Benzinga takes a closer look at these three companies. Chipotle - Chipotle (CMG) is a fascinating company which has created tremendous wealth for investors since going public in 2006. This is a very simple story to understand - an extremely attractive quality in any investment. Chipotle is awesome at making burritos and serving their customers. In a nutshell, that is the story. Not too complicated, but it has been very lucrative. The company is benefiting from a niche that it created in the quick-service restaurant industry - fresh, Mexican-inspired fare - and has developed a very strong brand moat around its business in short order. At one time, Chipotle (CMG) was owned by McDonald's MCD and the company's fast growth, brand development, and strong management execution bears a certain resemblance to the early days of its former owner. By any measure, Chipotle is a very high quality company and is running circles around many of its competitors in the quick-service restaurant space. The stock price reflects this. Since CMG's 2006 IPO, the stock is up 678%. In 2011, shares have risen better than 54% despite unfavorable market conditions. Despite a devastating financial crisis in the United States, CMG has been able to grow its revenues from 1.085 billion in 2007 to 1.835 billion in 2011. Net income has also been rising steadily each year. The bottom line is that Chipotle is a fabulous company, not unlike a young McDonald's (MCD). Of course, the stock's valuation reflects this. This is a name that investors are going to want to try to buy on deep pullbacks - which are rare. CMG trades at a trailing P/E of 51.26, a forward P/E of 38.18 and a PEG ratio of 2.30. It is very expensive. That should not completely dissuade potential investors, however, but patience may be key. If the market continues to pullback, keep CMG on your watchlist and buy it on the dips. Panera Bread - Panera is very similar to Chipotle in that the company operates an easy-to-understand food service business model, is exhibiting strong secular growth, and has built a high-quality brand moat. These qualities make it an investment that should be on the radar screen of growth investors seeking alpha in this rocky market environment. Panera operates a bakery-cafe concept focused on a quality selection of soups, salads, and sandwiches at reasonable price points. Like Chipotle, the company is capitalizing on a niche which exists between the fast-food segment and traditional restaurants. Being able to deliver consistent food and fresh ingredients in this context is driving customer loyalty, brand development, and revenue and profit growth at Panera. The company has grown its revenues from $1.066 billion in 2007 to $1.542 billion in 2011 amid a severe cyclical downturn. This is impressive. Net income has also gone from $57.46 million to $111.87 million during the same time period. These results have translated into eye-opening returns for the company's investors. Over the last 5 years, PNRA shares are up 145%. In ten years time, the stock has appreciated around 456%. Despite the strong growth, PNRA is still a small company, with a roughly $4 billion market cap, and can continue to add market share. On a valuation basis, PNRA is less expensive than Chipotle, but still not inexpensive. Given the company's operational and brand momentum, however, interested investors may want to dip their toes in on a small pullback. PNRA trades at a trailing P/E of 30.83, a forward P/E of 25.09, and a PEG ratio of 1.58. At current prices, PNRA is attractive compared to other companies who are more exposed to gyrations in the macro outlook. Under Armour - This is another emerging brand that is experiencing strong secular growth in the current environment. Again, this is not a terribly complicated story. Under Armour is a cool brand which has made substantial inroads with consumers through a strong marketing effort promoting their quality athletic apparel. This is a young company that is starting to resemble the early days of Nike NKE. Since going public in 2005, UA shares have risen 188%. The stock has been a strong performer over the last 52-weeks, rising better than 27%, far outpacing the broader market. The trajectory of Under Armour's revenues underline the fact that this is a company to watch going forward. Net sales have risen from $606 million in 2007 to $1.063 billion in 2011. This is extremely impressive given the economic downturn. Like the other stocks on this list, UA's high quality is reflected in its valuation. Shares currently trade at a trailing P/E of 43.42, a forward P/E of 31.06, and a PEG ratio of 2.03. Despite this rich valuation, Under Armour has significant room to grow and is one of the most interesting young companies to emerge in the retail space in recent years. Similar to Nike, the company has a stable of high profile athletes and a compelling marketing campaign which are driving the brand and consumer loyalty. As a result, UA is succeeding in a very tough retail environment and is carving out market share. This is a name that should remain on the radar of growth investors for years to come as the Under Armour story appears to be in the early innings of expanding its footprint in the global athletic apparel market. Traders looking for realtime investment ideas can get a free trial to Benzinga's news feed, Benzinga Pro, here.