9 Characteristics To Look At When Valuing Growth Stocks
Stocks that will increase dramatically over time.
1. Start a watchlist
Keep track of stocks you may be interested in. Keep it relatively short and reevaluate every so often.
2. Small cap
You want business that are going to double or triple your money.
3. Growing revenue
Revenue must be growing year over year and by a healthy amount.
4. founder led
Grow stocks generally have a strong leader that is motivated and has vision for the future of the business. Zuckerberg.
5. Not yet profitable
Grow can often mean that business is reinvesting it revenue back into the growth of the business. The business many not be profitable right now, but they definitely should not be losing too much money.
Eventually the business needs to make money. It should not lose money forever.
6. Grow through recession
The best businesses survive and thrive even through hard times.
7. Growing industry
The industry as a whole should be growing.
8. Big dreams
There should be a really big vision for a growth company like Restoration Hardware or Amazon.
9. Lean business operations
Apple does this well. The growth business should be really careful about how many employees and invest in projects that have a real chances of bringing the business new revenue.