Screening Strategy for Good Quality Growth Companies

A Screen for Quality Growth

Investors Seeking Good Quality Growth Companies

  • Sales over the trailing 12 months greater than or equal to $100 million,
  • At least five years of public trading,
  • Growth in sales of at least 7% a year over the last one-, three- and five-year periods as well as fully diluted earnings per share from continuing operations of at least 14.9% over the same periods,
  • Coefficient of determination (R2) over the last seven years for sales growth and fully diluted earnings from continuing operations growth greater than or equal to 95%,
  • Operating margin for the last 12 months greater than or equal to 95% of the company’s five-year average operating margin,
  • Operating margin for the last 12 months greater than or equal to the industry’s median operating margin for the same period,
  • Return on equity (ROE) for the last 12 months greater than or equal to the industry’s median return on equity for the same period and
  • Estimated growth rate in earnings per share of at least 14.9%.

Minimum History

Minimum Sales Growth

Earnings Growth

Testing for Sales and Earnings Stability

Profit Margins

Return on Equity

Expected Earnings Growth

Closer Scrutiny

Stocks Passing the Inve$tWare Quality Growth Screen (Listed Alphabetically)

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