How to find high growth companies
One of the most effective indicators in the stock market is earnings growth. Use it to screen for the performing stocks and build your portfolio.
Stock picking is about separating one stock from another and relative ranking by earnings growth is ranked third as the most effective indicator for predicting stock performance.
Why screen stocks by earnings growth?
Since 2011 our studies have shown avoiding stocks in unprofitable companies has saved investors a lot of money and grief. In our research we refine the screening process further by ranking stocks for both earnings and sales growth. Companies with accelerating growth rates in earnings and sales (revenues) have been the driver for the stock market's biggest winners. Think AAPL since 2004.
How to find a company's earnings growth
Publicly listed companies are required to issue quarterly and annual financial statements. They are available through many sources but one of our favourite is stockwatch.com. This online resource is nicely organized with a list of headlines for press releases. It's also free.
First, check the news box then, if necessary, click on 1 year bulletins. You can see the screenshots below.
Then scroll through the list and look for the most recent earnings.
Click on the link and work your way through the press release. Unfortunately, stock exchanges do not require any particular format for financial statement presentation in press releases. Some companys make it far more difficult than necessary. But the info. is there if you look hard enough. Now you have a starting point for establishing the current growth rates for earnings and sales growth. When looking at earnings use diluted E.P.S. for comparison purposes to the prior period.
Many people don't care about a big stock market correction right now. But they will. The question is when do you react; near the beginning or when it's too late? Timing matters.