Finding Growth Stock Winners: Focus on 8 Fundamental Factors
In the classic musical “The Sound of Music,” the character of Sister Maria (played by Julie Andrews) tells us that we should start at the beginning because “that is a very fine place to start.”
In our search for profits investing in growth stocks, however, we do the opposite and start our search at the end. The plain fact is that at the end of the day, what makes for a great growth stock is the fundamentals of the company:
- Can the company continually sell more of its products and services at higher and higher profits?
- Can it continue to innovate and adapt to marketplace changes and maintain a leadership position?
How do you identify these companies?
One definitive factor I have found over the years is that change is a fact of life on Wall Street. All too often I hear a pundit or guru telling us of one magic-bullet variable that is most important in picking winning stocks—such as price-earnings ratio or price-to-cash-flow ratio. Of course, these magic-bullet fundamentals can fall out of favor quickly.
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