One aspect I like to see in growth stocks is sales, earnings and cash flow all moving generally in the same direction. Management can overspend for sales growth, leading to great sales numbers but not much profit to show for it. Likewise, companies can manipulate numbers and cut costs to grow earnings, but then growth will eventually suffer.
This week I looked for companies on the smaller side—market caps of $200 million to $4 billion with ten year growth rates of 20% or above for revenue, 20% past five years growth rate on earnings (so I don’t exclude new companies just starting to turn a profit) and historical cash flow growth rates of at least 10%. I used MyStockProspector.com for this screen. Below are 11 stocks that met my criteria.
Several of these companies are foreign. Be careful when comparing companies across countries, because some countries have unusual accounting rules that can make comparisons very difficult. Worse, some countries don’t enforce financial reporting regulations as stringently as here in the U.S.
This stock screen was originally published in the December 23, 2019 edition of the BetterInvesting Weekly newsletter and is based on results from a Value Line screen that met the following criteria as of December 17:
Market capitalization between $200 million and $4 billion.
Ten-year revenue growth rate 20% or higher.
Cash flow growth 10% or higher.
Five-year EPS growth rate of 20% or higher.
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Companies listed are for educational purposes only. No investment recommendations are intended.