|I am doing a copy/paste of the entire article in IBD, not just the section on ABMD, in case other stocks held by the mutual fund are of interest to others (AMZN, NFLX, BABA). For anyone just interested in ABMD, though, I am copying it before the entire article:|
"Abiomed is in the dynamic growth bucket. The stock replaced leisure-lodging stock Wyndham Worldwide ( WYN) in the S&P 500 index. Many funds, especially index funds, will add Abiomed to their portfolios just because it is now part of the popular benchmark. "Abiomed has had the biggest innovation in cardiac surgery in years by having a balloon pump to help patients extend the life of their hearts during cardiac arrest," lead manager Kelly said. "It works substantially better than all preceding technologies."
The company's market opportunity is about 10 times what its market is today, Kelly says, as its technology grabs market share over the next five to 10 years."
Growth Stocks Like Abiomed And Alibaba Drive This MainStay Fund's Outperformance
How hot is $12.5 billion MainStay Large Cap Growth Fund (MLAAX) right now? Very! Driven by leading growth stocks like Abiomed ( ABMD), Alibaba ( BABA), Amazon.com ( AMZN) and Netflix ( NFLX), the MainStay fund is up 13.37% this year going into Thursday.
That tops 95% of rival large-cap funds focused on growth stocks that are tracked by Morningstar. And it dwarfs the S&P 500's 2.7%.
Abiomed, which was added to the S&P 500 on Thursday, has grown earnings per share at a triple-digit pace in the past three quarters. The maker of cardiac pumping devices is up 103% so far this year.
As of Thursday, Alibaba was up 15% this year. Amazon had climbed 39%. Netflix had notched an 83% gain.
As the fund explains to investors considering buying shares, the managers look "to diversify holdings across three distinct, yet complementary, types of earnings growth to participate in different market cycles."
In addition, the fund sticks to subadvisor Winslow Capital's "no preferred habitat" approach. That means broad diversification with an eye to managing risk by not being overexposed to any one area of the market.
MainStay fund managers Justin Kelly and Patrick Burton cope with different market environments by adjusting their allocations among three types, or buckets, of growth stocks.
One bucket holds stocks that Kelly and Burton think will be able to sustain earnings growth for long periods. The second bucket holds dynamic growth stocks — stocks in newer industries with rapid growth. The third bucket holds cyclical growth stocks. Operating in more economically sensitive sectors, they may be more volatile.
Leading Growth Stocks Abiomed is in the dynamic growth bucket. The stock replaced leisure-lodging stock Wyndham Worldwide ( WYN) in the S&P 500 index. Many funds, especially index funds, will add Abiomed to their portfolios just because it is now part of the popular benchmark.
"Abiomed has had the biggest innovation in cardiac surgery in years by having a balloon pump to help patients extend the life of their hearts during cardiac arrest," lead manager Kelly said. "It works substantially better than all preceding technologies."
The company's market opportunity is about 10 times what its market is today, Kelly says, as its technology grabs market share over the next five to 10 years.
Alibaba's Four Markets Alibaba is another dynamic growth holding. It is the leading e-commerce platform in China, and its share is growing.
"Alibaba is pursuing four markets that are extremely large," Burton said. "The first is its traditional e-commerce business in China. The second is digital advertising. As the company adds e-commerce customers, it boosts its advertising business. The third is its cloud computing business. As it builds its online infrastructure, it can sell that service to other companies. And the fourth is its emerging retail business. It is taking its e-commerce and logistics expertise and applying them to grocery and food delivery, where there is a massive total available market opportunity."
Alibaba is a member of the IBD 50 roster of growth stocks. So are Netflix and Abiomed.
Amazon, which is on IBD's Leaderboard, is in the fund's consistent growers bucket. The stock barely paused when it recently took heat amid news that one of the company's Echo smart-speaker devices recorded a couple's private conversation in their home and sent it to someone on their contact list without their knowledge.
"Amazon is our largest holding," Kelly said. "We're still excited about their two main businesses. The first is retail, which still has a tremendous runway to go. They have 5% of total retail transactions in the U.S., but they get 20% of the total growth. That indicates that they will get to 20% of the total market, so the opportunity is four times what it is today."
Amazon Web Services is the second business that Kelly and Burton like. "We think it is in the early stages of moving corporate work flows from on-premises software to the cloud. Their technology for doing this is in the front of the industry, so they should remain the leader, with Microsoft ( MSFT) number two, and that's why Microsoft is our second largest holding."
Other Growth Stocks Among other holdings, ASML ( ASML) is in the fund's cyclical growth bucket. The Dutch-based company is a manufacturer of lithography systems used to manufacture integrated circuits. Its shares are up 15% this year.
"ASML has two key drivers," Burton said. "First is global demand for semiconductor chips, which is expanding at two-plus times the growth rate of global GDP. It's driven by growth in cloud computing and mobile communications."
Burton likes ASML's EUV technology. "It stands for extreme ultraviolet, and it helps makers of chips. ASML is the only company in the world with this technology."
[huge chart for fund cut out--see article via link if interested in the mutual fund]