How to identify promising growth stocks in the future?!
There are many dynamic brands in the US that quickly rise through the growth stage, such as Tesla. How can you find stocks that have the potential to show dramatic growth in the future? Here is a summary of the points for evaluating a company's growth potential.
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Revenue (sales) growth
The growth of earnings (sales) is also the growth of a company, so it is essential.
Absolute value of earnings growth rate
→Compared to the previous year20% or moreCompanies that have shown profit growth and have steadily increased profits since then are attractive.
Changes in earnings growth
→Ideally, the growth rate is increasing over time.
Comparison with other companies in the same industry
→Companies that have the potential to make a big leap forward in the future tend to have higher profit growth rates compared to other companies in the same industry.
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Net profit growth
Net profit growth is an important factor influencing a company's performance.
Absolute value of net profit growth rate
→Compared to the previous year20% or moreCompanies that have shown growth in net profit and have steadily increased net profit since then are attractive.
Changes in net profit growth
→Ideally, net profit increases over time.
These two are similar to the points we look at when evaluating revenue growth.
However,When looking at the growth rate of net profit, it's important to compare it to the growth rate of revenue.
→It's good if the growth rate of net profit is higher than the growth rate of earnings。
This is because it is thought that companies that are growing along with improvements in profitability are taking high-quality growth steps that never end with only a temporary increase in earnings.
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Sustainability of growth
There is a possibility that growth accompanied by sustainability will increase competitiveness and increase stock prices.
Companies with consistent revenue and net profit growth for over 5 years
→You can think that there is a possibility that growth will be sustainable.
When the industry is likely to grow
→There is a possibility that the potential growth rate of companies in that industry is also high.
Companies that meet these conditions are likely to be promising and grow exponentially in the future.
In particular, it's been a long time in terms of net profit growthloss-making companiesIsn't the timing of the transformation into a surplus company worth paying attention to in terms of stock prices?
If you are an investor who anticipates large price increases and gains, it might be a good idea to take on the challenge of investing in growth stocks that are promising in the future.
However, please be aware of the differences in stance between value investing and growth investing, and make your own investment decisions.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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dsrjjneepomupomu : When it comes to deciding whether to buy stocks, there's no point in breaking it down to a quantitative stage