How to select the growth stocks
Cisco systems, the hardware major, it came public in 1990, this stock were returned to investor about 75000 percentage, until it early 2000. This gain was big enough to turn a $3000 investment in 100 shares in to over 2.2 million dollar. Other example, Indian IT leader Infosys, it came to public offer in 1993. In 1999, which stock return is 85 times for investors.
Every one can identify by follow this rules, these rules are base on how the stock actually work in reality, rather than on how the majority of people think it works.
1. Earning per share in the latest quarter should be up at 25 percent versus the quarter a year ago, and preferably much more.
2. Earning growth should be accelerating at some point in recent quarters compared with earlier rate of change.
A company that has been growing at 25 percent for several quarters and suddenly start growing at 40 percent. In some cases, that grow the could have lasted two or three quarters.
3. Annual earning for the last three years should be increasing at a rate of 25 Percent per year or even more.
4. Sakes should be up 25 percent or more in one or more recent quarters or at least accelerating in their percentage change for the last three quarters.
A company's growth to be sustainable, its important to have both strong and accelerating sales and improving earnings. One without other is not reliable.
5. The after tax profit margin in the most recent quarters should be either or at least close to a new high and among the very best in the company's industry.
6. Return on equity should be 15 to 17 percent or higher. Return on equity measures how efficient a company is with its money. 25 percent Roe is better than 17 percent, and 35 to 40 Percent is better than 25 percent.
7. Technology company should show cash flow earnings per share greater than regular earnings.
8. The stock should have institutional sponsors such as mutual fund, banks, insurance companies and Fii's should be increasing quarter by quarter for several quarters.
9. It' s usually a plus, if the company is buying back its own stock preferably 5 to 10 percent or more.
10. It's vital in any stock you buy that you really understand the story of the company. You should blindly hang on, if the stock is not working out as expected. Always pay attention to what the market us telling you about your stocks. Look for the real present day leaders. New one continually emerge.
Every one can identify by follow this rules, these rules are base on how the stock actually work in reality, rather than on how the majority of people think it works.
1. Earning per share in the latest quarter should be up at 25 percent versus the quarter a year ago, and preferably much more.
2. Earning growth should be accelerating at some point in recent quarters compared with earlier rate of change.
A company that has been growing at 25 percent for several quarters and suddenly start growing at 40 percent. In some cases, that grow the could have lasted two or three quarters.
3. Annual earning for the last three years should be increasing at a rate of 25 Percent per year or even more.
4. Sakes should be up 25 percent or more in one or more recent quarters or at least accelerating in their percentage change for the last three quarters.
A company's growth to be sustainable, its important to have both strong and accelerating sales and improving earnings. One without other is not reliable.
5. The after tax profit margin in the most recent quarters should be either or at least close to a new high and among the very best in the company's industry.
6. Return on equity should be 15 to 17 percent or higher. Return on equity measures how efficient a company is with its money. 25 percent Roe is better than 17 percent, and 35 to 40 Percent is better than 25 percent.
7. Technology company should show cash flow earnings per share greater than regular earnings.
8. The stock should have institutional sponsors such as mutual fund, banks, insurance companies and Fii's should be increasing quarter by quarter for several quarters.
9. It' s usually a plus, if the company is buying back its own stock preferably 5 to 10 percent or more.
10. It's vital in any stock you buy that you really understand the story of the company. You should blindly hang on, if the stock is not working out as expected. Always pay attention to what the market us telling you about your stocks. Look for the real present day leaders. New one continually emerge.
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