Wednesday 9 December 2009

Investing Strategy - Growth Investing

Growth Investing


Look for three characteristics of Growth - superior brand, good management and superior technology.


Buying:
  • A PEG less than 0.75
  • Market Capitalization greater than GBP 20m
  • PE less than 20
  • High projected Earnings Growth 1 - 5 years.
  • Highest 1, 3, and 5 year historical Earnings Growth
  • High continuous EPS Growth, historical and current.
  • Positive Earning Surprises.
  • High Revenue Growth.
  • Positive Cash Flow.  Cash Flow per share should be greater than Capital Expenditure per share.  Cash Flow per share should exceed EPS.  Low P/CF ratio.
  • Positive Relative Strength over the last 1, 3, 6, and 12 months.
  • Net Gearing less than 50%.  Interest Cover, Quick Ratio, and Current Ratio need to be healthy.
  • Look for high Margins relative to the sector and a high ROCE.
  • Pay attention to Directors' Dealings
  • Check recent Brokers' Estimates

Entry
  • TA signals

Exit: 
  • If the PEG has doubled.
  • Trailing Stop/Loss of 10%

http://www.docstoc.com/docs/7984050/Investment-Strategies (Page 96)

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