[stock pick tips] How to look for growth stocks

Dear Readers,

Today's tip is going to describe some fundamental criteria for
stock selection process for any stock trader or stock investor.
It is quite common that many technical traders prefer to trade
stocks that have also good fundamental background.

It is also well known that stock price rises strongly or declines
rapidly with the flow of money from big institutional investors.
They place their midterm bets based on fundamental analysis. So
it could be good to have some fundamental background for your
stock picking process, too.

There are two typical scenarios that are used for fundamental
screening. Stocks with growth potential and stocks that pays good
dividends.


Basic parameters to find best growth stock
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The best parameters for selection of best candidates for growth
stocks portfolio are revenue growth, earnings per share (EPS)
development and net profit margin.

The growth in sales and revenue is the ultimate indicator of how
a company manages to create new business and grow. By checking
the EPS values you get a "clean" measurement of earnings
growth adjusted for any changes in number of shares outstanding.
The growth has little value if the company can't generate
profit from that growth. So you have to select companies with
some decent value for net profit margin.

More about using these parameters for growth stock selection is
on my website:
https://app.getresponse.com/click.html?x=a62b&lc=BCsmx&mc=Br&s=0NyX5&y=U&


Additional filters can be defined using these parameters
--------------------------------------------------------

Equity Ratio – Value companies in general have a very robust
balance sheet. The equity ratio is the ratio between the Equity
and Assets and therefore it indicates how much debt the company
has. The company should also be able to manage its debt through
the worst of times. A range of 50% to 100% as an equity base (so
0% to 50% debt), should be a good starting point for a safe
company.

Price/earnings to Growth (PEG): This is very popular criteria
used by growth investors. That relates P/E in relation to the
estimated EPS growth for the coming three years, indicating
valuation of the expected growth in the company. Below 1
indicates growth valuation at reasonable price.

Price to Earnings ratio (P/E) –The most commonly used earnings
valuation ratio is the P/E. Through the stock screener you are
able to screen for forward-looking earnings ratios. In this case
we will choose P/E for next year and use the interval; 5-20. A
P/E below 5 is not plausible for a growth company and above 20
could signal overvalued growth.

If you want to learn more about dividend stock picking, then
check this resource page for dividend paying stocks selection:
https://app.getresponse.com/click.html?x=a62b&lc=BCsmT&mc=Br&s=0NyX5&y=5&

Stay tuned for your next email.


Very Respectfully,

Richard Koza
Private stock trader
https://app.getresponse.com/click.html?x=a62b&lc=BCsmc&mc=Br&s=0NyX5&y=k&

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