DISCLAIMER
I am not a registered investment advisor with the SEC. Nothing in this video, should be taken as legally binding investment advice, in the same way that SEC licensed stockbrokers can advise their clients. I am not “selling” any stocks or OTC penny stocks as a broker in this video. The purpose of this video, is only to offer guidance to those who are interested in educating themselves, about self-directed investing and Biblically Responsible Investing (BRI).
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FINVIZ SCREEN: BENJAMIN GRAHAM’S RULES APPLIED AS MUCH AS POSSIBLE
FINVIZ SCREEN: PHILIP FISHER’S RULES APPLIED AS MUCH AS POSSIBLE
FINVIZ SCREEN: PETER LYNCH’S RULES APPLIED AS MUCH AS POSSIBLE
BENJAMIN GRAHAM SCREEN: STOCK COMPARISONS WITH S&P GLOBAL (SPGI)
PHILIP FISHER SCREEN: STOCK COMPARISONS WITH S&P GLOBAL (SPGI)
PETER LYNCH SCREEN: STOCK COMPARISONS WITH S&P GLOBAL (SPGI)
GRAHAM-FISHER-LYNCH TOP PICKS:
STOCK COMPARISONS WITH S&P GLOBAL (SPGI)
1. Euroseas (ESEA)
2. ArcBest (ARCB)
3. Encore Wire (WIRE)
4. Bit Digital (BTBT)
Since the above is supposed to be a successful screen for 5-year growth stocks according to my application of Benjamin Graham, Philip Fisher, and Peter Lynch to Finviz as much as I could. (No income statements or balance sheets were involved this time,) I’ve decided to show the 5-year Google charts for each of them:
In review, I have to view ArcBest Corp (ARCB) and Encore Wire Corp (WIRE) as the winners of the 5-year growth stock comparison. Seeing that they are currently priced at $102.18 and $199.61 and were 5-year twobaggers, I’m now forced to go back to what Michele Cagan’s Investing 101 said about growth stocks:
Growth stocks, as you can probably guess from the name, include companies that have strong growth potential. Many companies in this category have sales, earnings, and market share that are growing faster than the overall economy. Such stocks usually represent companies that are big on research and development; for example, pioneers in new technologies are often growth-stock companies. Earnings in these companies are usually put right back into the business, rather than paid out to shareholders as dividends. Growth stocks may be riskier than their blue-chip counterparts, but in many cases you may also reap greater rewards.
Cagan then quotes T. Rowe Price saying that investors should be buying growth stocks and “retaining them until it becomes obvious that they no longer meet the definition of a growth stock” (pp. 43-44).
Larry Burkett’s Investing for the Future echoed the words of Fisher and Cagan when he said:
Growth stocks are usually associated with newer companies, or emerging technologies. IBM was considered a growth stock in the early fifties. Xerox was a growth company in the sixties. Texas Instruments was a growth company in the seventies. Apple Computers became a growth company in the eighties…This does not mean that once a company has been a “growth company” that the stock does not appreciate. IBM is a good example of a company that has seen a steady growth pattern for more than three decades. But compared to the company’s early days it would now be considered a stable income company (pp. 201-202).
Fisher, Cagan, Burkett, and T. Rowe Price are all agreed about these aspects of a growth stock:
1. The sales and earnings (EPS) growth is faster than the S&P Global 500 (SPGI, 12% annual sales growth on the MarketWatch: Financials: Income Statement).
2. There’s a big budget for research and development in the income statement.
3. It’s pioneering a new technology: usually with electrical engineering and manufacturing.
4. The first few years after the company’s IPO date have the most profitable growth spurts, but old stocks will stagnate in their growth eventually.
Don Underwood’s Grow Rich Slowly: The Merrill Lynch Guide to Retirement Planning also has this to say about the aggressive growth stock trader:
You want to move a bit faster. Not only are you trying to outperform the market, over a two-to-three-year period (DJIA, S&P 500), but you are willing to move among asset classes–stocks, bonds, cash–on a regular basis in order to do it. Again, because you are looking for growth, much of your assets–maybe two-thirds–will be in stocks. But you’ll own a higher percentage of small cap stocks than the people who are searching for growth and income, and you may own a few speculative issues as well (microcap stocks)…No risk, no reward, that’s your motto. You want to increase your capital, and do it quickly. When you talk about making a “long-term” investment, you’re probably talking about having your money tied up from one to two years. Why the shortening of time horizons? Because aggressive investors want to take immediate advantage of the changes in the relative values of different kinds of assets…they’ll put their money in investments with far greater growth opportunities…One way of being aggressive–possibly the most dangerous way–is to commit a lot of your money to just one issue…You’re going for broke. You’ll pass up the relative safety that comes through diversification for the potentially high appreciation you can receive by owning a substantial number of shares of one stock…Also, aggressive investors are usually far more interested in growth than they are in dividends…They figure the capital gains produced by these stocks will be greater than any dividends they might receive…You’re trying to make volatility work in your favor…Aggressive investors seldom hedge their bets. They’re willing to put all their eggs in one basket (and then they–or their money managers–watch that basket very carefully)…The real problem can be summed up in three words: risk, risk, risk. However, the possible rewards can also be described in three words: gain, gain, gain (pp. 241-244).
This leaves us with a few additional guidelines:
5. Small cap stocks and microcap stocks (in that order).
6. Outperforming the S&P 500 over a 2-year time projection (TipRanks Stock Comparison).
7. Own one share of hundreds of small caps and microcaps and watch them every day. Add hundreds of dollars or even thousands of dollars to stocks that have a gainful day in the area of 200% to 1,000%, and see what happens. Sell 99% of the shares when it becomes obvious that the rally is over so you can cut your losses.
Lastly these words from Amy Domini’s Ethical Investing can cast more light on growth stocks:
INC. tracks the fastest-growing public companies in America…When I discuss investing in small companies, I am not boosting penny stocks. These are stocks (usually priced below $5 a share) of companies which have little more than an idea for making money. These companies are rank speculations, nothing more. During every market rally, I hear stories about fortunes being made on the Denver Exchange, where penny stocks are sold…Always look for companies that can finance most of their growth internally. If a company has to issue more stock, the new shares will dilute earnings. If it has to issue debt, the balance sheet picture weakens considerably…The small company often has one basic product or service area. It usually has one one type of customer. And it offers an enormous potential for growth or income…Over the last decade small companies have offered enormous returns to investors who previously only dreamt of such rewards…The larger, more established companies present less risk. However, they do not offer the same chance for spectacular growth. It is considerably easier for an emerging company with [sales] revenues of $5 million ($14m in 2023) to double them for a larger company to double $2 billion ($6b in 2023)…Growth stocks are relatively expensive…However, all growth-oriented investors share one characteristic: patience. They do not sell at the first sign of a profit so long as there is still a good reason to continue to buy the stock. They stick with an investment for the long haul, selling only when the vehicle’s growth stalls….By investing in the stocks of companies which are growing quickly, George and Julie give themselves an opportunity to meet their future cash needs more easily…the capital gains they should realize will put their children through college…Where do you look for growth among traditional investments? Common stocks…The alternatives will not produce the growth you are looking for…The best play for growth is to find fast-growing industries and identify the best companies in them, to buy their stocks, and to hold them until the moment comes to sell…What you need is a realistic view of the company’s growth potential. The most important data are earnings projections. These projections can have a drastic effect on a company’s stock…Your local library may carry Standard & Poor’s Earnings Digest or Value Line, which lists the projections of many companies’ earnings…At this point you have all the information you need to make a decision…Armed with this information, you are ready to place an order (pp. 83-86, 88-89, 92, 96-97, 99, 106).
She restated and confirmed some of the things that were said above already, but in terms of some additional guidelines on growth stocks, she says:
8. Penny stocks priced under $5 a share are not the same thing as growth stocks. Penny stocks should be considered as get-rich-quick speculations. The main difference seems to be in the price of the stock.
9. Balance sheets should say that earnings are increasing and debt is decreasing (use Value Line).
10. Growth stocks center around one fast-selling product.
11. Nanocap stocks (under $50m) are what Domini means by growth stocks. ARCB does not qualify as a growth stock here because Value Line says the revenues are $3.9b which is slightly over the Market Cap of $2.5b. WIRE does not qualify as a growth stock here because Value Line says the revenues are $2.5b which is slightly under the Market Cap of $3.66b.
12. Growth stocks are expensive (points to ARCB and WIRE are because of their $100+ prices, but away from them in terms of their Market Cap). According to Domini, “expensive” is relative: but we do know that the price is far above the penny stock price of $1 to $5. In her view a true-blue growth stock might be defined as a stock from the INC. 5000 or just IPO lists on inc.com that have a moderate to high price with a Market Cap in the Nanocap category.
13. Growth investors have to be patient for the day when their stocks will rally into profitable gains.
14. Most parents put their kids through college from the capital gains of growth stocks.
FINVIZ SCREEN: AMY DOMINI’S RULES APPLIED AS MUCH AS POSSIBLE
AMY DOMINI SCREEN: STOCK COMPARISONS WITH S&P GLOBAL (SPGI)
THE FINAL RESULT OF ALL THE SCREENS:
5 STOCKS POSITIONED TO BEAT THE S&P 500:
BELOW IS THE MOST PROFIT-POTENTIAL LIST OF GROWTH STOCKS I HAVE EVER POPULATED. IT RANKS ALL THE GROWTH STOCKS BASED ON 3-YEAR PERFORMANCE. IT IS 2 PAGES LONG AND CONTAINS THE FIVE STOCKS ABOVE: ESEA, CMT, ARCB, WIRE, BTBT: – HERE’S THE LINK TO IT:
UPDATE: 2/19/23 – After hours of study and analysis, after the above video was posted, I found what I believe comes to be the closest things to 3-year and 5-year short lists of growth stocks in the Amy Domini sense. Of course, BRI screening and fundamental stock valuation in terms of balance sheets and income statements, increasing cash assets, increasing yearly sales growth, and decreasing yearly long-term debt, need to be applied to all of them as further filters, but still this is the best thing I got. These are the types of stocks that Domini says young parents use to put their kids through college:
3-YEAR GROWTH STOCK LIST
WesleyGospel.com 