- Fundamental financial statement trend analysis at a glance.
- Risk Research data is presented in the form of graphs and succinct conclusions.
- We provide professional investors tools based on fact rather than opinion or conjecture.
- Studies of Multibaggers — the top one percent of companies in terms of returns to shareholders — indicate common characteristics.
We follow two categories of growth stocks:
- The largest 25 positions in the portfolios of the ten best-performing growth managers over the last ten years.
- The few growth companies capable of revenue and free cash flow growth without added debt or issuing stock. That’s not easy.
Only truly exceptional companies can grow without adding debt or raising equity capital. Our software continuously combs through the financial statements of all public companies looking for that elusive combination.
We follow the few that qualify — around 1% of all public companies — and accumulate positions gradually, on weakness, as indicated by artificial intelligence software. Their common characteristics include:
- Revenue growth of over fifteen percent per year, or ten percent when accompanied by fifteen percent free cash flow growth.
- Improving return on assets by operating free cash flow, generally due to improving margins.
- Financial strength rating of “Significantly Above Average” or “Exceptional” (Average score out of 100 of all public companies is 21. Average score of SuperGrowth MultiBaggers is 98; minimum score to qualify is 70).
- Financial strength trend improving or at least stable as measured by:
- Free Cash Flow/All Liabilities.
- Return on Assets by Operating Free Cash Flow.
- Equity (at estimated intrinsic value)/All Liabilities.
- Cash/All Liabilities.
- Interest coverage by operating free cash flow.
- Compounder Score (Stability And Rate Of Improvement — Free Cash Flow and Intrinsic Value — Over The Last Ten Years Versus the Most Recent Two Years).
- Operating free cash flow and pre-tax free cash flow per share improvement.
Significant potential investment return over next five years as indicated by both earnings multiple expansion and free cash flow growth.
We call those rare companies the SuperGrowth MultiBaggers. We also carefully follow the largest positions held by Master Growth Investors, including those that don’t qualify as SuperGrowth MultiBaggers, based solely on the track record of these leading managers. And, absolutely crucial, based on the power of the AI Algo.
Rapidly growing sales, gross
profit and free cash flow.
Expanding margins (and/or
asset turnover) resulting in
higher return on assets.
Balance sheet trends
that support the conclusion.
Reasonable pricing in relation
to long-term relationships
of price-to-free cash flow
Approximately half of total
return is due to multiple
In all, a total of eleven pages of graphs, tables and succinct conclusions are produced on each
SuperGrowth MultiBagger and Master Investor Holding
One Of The Most Difficult Questions In Growth Stock Investing Is How Much To Pay (And Its Closely Related Corollary, When To Buy)