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Variations on the Growth Theme |
Our Ideal Stock - Why?
- 15% growth rate
- Smooth, consistent data lines - predictability
- Parallel lines - management in control
Graphics courtesy Ellis Traub's book, Take Stock
For more detailed info see the book, click here.
Innocent Bystander
- One bad year
- Further back in history less important
- more recent in history - more significant
Could Have Been Contender
- Good growth
- Sales never made it to steady profits
- Impossible to predict
Bowless Arrow
- Slowing early rapid growth
- Not yet stable
- Hard to predict
Bow & Arrow
- Slowing early rapid growth
- Stabilizing growth
- Easier to predict
The Rocket
- Large surge in growth rate
- Usually due to an acquisition
- Click here for more info on acquisitions
The Flatliner
- No growth
- Heartbeat of the company is dead
- Possible income stock
The Disaster
- Negative growth
- NEXT!
Motor Cycle (not motorcycle)
Two types - Growth Cyclical & True Cyclicals
Growth - Cyclical
- Growth slows with economic slow down
- Resumes with end of economic slow down
True Cyclical companies
- Examples are the big name car (motor) companies, GM, Ford, etc
- Small dip in sales (due to economic slow down) results in large dip in eps
- SSG will detect them, but not designed to analyze them
Comments
Relative to The Rocket, my experience is that after an acquisition, growth, whether it be Revenue growth or EPS growth, simply does not do the skyrocket routine. Sure, there may be a step up in Revenues and/or earnings, but the growth does not continue to increase as indicated. Usually, the growth resumes the growth experienced prior to the acquisition, perhaps with some slight variation, but not as dynamically illustrated
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Last Modified 2005-04-29