At Darda Financial Services L.L.C., a fee-based wealth management services firm in Winston-Salem, North Carolina, founder and CEO Danny Freeman's stock-watching philosophy is blunt. The financial adviser says that the truism of investing "is the simple fact that capital will always flow to where it can earn the highest rate of return at some acceptable level of risk.†Freeman knows that the impact of Europe's ongoing fiscal melee and political gridlock in Washington, D.C., have dampened investor optimism. He intends to reassure skittish investors that there are well-established, financially sound firms that are growing and some that sport dividend yields. The market is making a grinding escalation, he says, but one that could continue for the next three to five years. With that in mind, he offers the following three stocks he believes are poised for growth during that period. 1 Caterpillar Inc. (CAT) Even from a distance, many Americans see black lettering on the sides of big yellow construction machines and know it spells CAT. The $60 billion Peoria, Illinois-based company is the world's largest maker of construction and mining equipment and other heavy machinery. It had strong growth up until housing collapsed, European markets imploded, and China and India sputtered. But CAT is now springing back, Freeman says. In 2011, revenues grew 41%; much of that growth came from foreign sales, which are likely to continue. Earnings per share could grow from $7.40 to $15 by 2015, and CAT has a dividend yield of about 2.2%. It is an attractive investment opportunity because it is so deeply intertwined with the global recovery, says Freeman. He predicts that several factors could boost the share price, including renewed orders from builders benefiting from a U.S. housing market recovery. In April, CAT opened its fourth manufacturing facility in India as South Asia's giant builds new roads and other infrastructure. Freeman says China, which announced a $150 billion infrastructure investment program in September, will push CAT's growth as the country "uses CAT equipment that helps convert farmland to urban and commercial uses.†PRICE: $82.81 - P/E: 9.46 (Continued on next page) 2 Agrium Inc. (AGU) The Alberta, Canada-based firm (whose stock is sold on the NYSE) is the largest agricultural retailer of fertilizers, crop chemicals, and seed to U.S. farmers. In August, Agrium–which also wholesales key crop nutrients nitrogen, potash, and phosphate–posted record second-quarter sales, beating analysts' forecasts. "Basically, anything you need to make crops grow and keep bugs from eating them, Agrium can provide,†says Freeman. That's crucial, he says, as a decline in the percentage of arable land worldwide is forcing farmers to find other means, typically through the use of fertilizers and other chemicals, to increase crop yields. Agrium is positioned to better serve the demand in emerging markets for grain to feed cattle and other livestock. The $16 billion company, which has seen its share price rise from $30 to more than $100 since 2009, is cash flow positive, has low debt, about a 0.71% dividend yield, and is projected to grow revenues at 15% or better over the next three to five years. Freeman says, "As countries continue to grapple with feeding their people and global demand for biofuels continues to rise, Agrium should continue to exhibit strong growth and profitability.†PRICE: $104.02 - P/E: 10.08 3 CSX Corp. (CSX) CSX Corp. is an international transportation company offering a variety of rail-based transportation services, including the shipping of intermodal containers and trailers to major population centers east of the Mississippi River. If you have a product that needs to be moved in large quantities, CSX is likely to be involved. The transportation supplier helps transport food, automobiles, gravel, and coal, among other items. In September, Goldman Sachs labeled CSX a buy, and investors would benefit from a cold winter, which would increase coal shipments for heating. "The primary reason CSX is so attractive is because it is a proxy on economic demand,†Freeman says. The $11 billion Jacksonville, Florida-based company ships to more than 70 ports and has more than 21,000 miles of track in 23 states, the District of Columbia, and two Canadian provinces. Although rising fuel prices have hurt CSX's margins, volumes are recovering as the U.S. economy regroups. Strong growth from the automotive industry has helped sales volume, and Freeman believes investors may see 12% earnings growth between now and 2015 and improved profit margins. The stock currently has a 2.46% dividend yield. "This is a stock that can easily trade 50% higher on [a] continued moderate recovery of the U.S. economy,†he says. PRICE: $21.45 - P/E: 12.07