Growth stocks can mean different things to different people, but I personally define a growth stock as being shares in a company that continues to increase both it’s earnings and dividends each year (and has a long history of doing so). So with that in mind, I want to talk about when you should sell these stocks, because this is very important. 

If you’re lucky enough to have found some good quality growth stocks and are sitting on some decent profits, then it can be tempting to bank your profits and reinvest the proceeds elsewhere. However, as Warren Buffett will tell you, this isn’t necessarily the best strategy. 

The best strategy, provided that you’re prepared to hold on to your shares for the long term, is to resist the temptation to sell and hold on for further gains. Yes there may be short-term fluctuations along the way, but providing that the company in question continues to increase both it’s earnings and dividends each year, there is no need to sell because the share price will eventually rise to reflect this continued growth. 

If you hold on to shares for as long as a company continues to grow and reinvest the dividends received each year, then you can be sure that you will be sitting on some substantial gains when you do finally decide to sell. This is something that Warren Buffett does to devastating effect. He simply looks for outstanding market-leading companies that continue to grow their profits each year, and holds on to these shares for years and years to benefit from both capital growth and dividends. 

It requires a great deal of patience because in the short-term the share price can fall in line with the overall market, but in the long-term it rewards you with some fantastic profits. The difficulty is finding the right companies to invest in, but there are some obvious candidates amongst some of the large-cap stocks. For example here in the UK Tesco is a fantastic company because it has a long history of growing both it’s earnings and dividends. Indeed I believe Buffett himself owns shares in Tesco at the time of writing. 

So to answer the original question of when should you sell your shares in growth stocks, you should hold on to your shares for as long as possible to benefit from both capital growth and dividend reinvestment. The only time you should consider selling is when there is a danger that the company may stop increasing it’s bottom line each year, maybe due to another major competitor gaining market share, for instance, because that will obviously mean that the share price is unlikely to continue rising in future years.

Washington, DC (PRWEB) November 8, 2007

Growth stock investors looking for high quality investment research in the mid cap and large cap sectors can now turn to Top Stock Insights, which launched on November 8.

Top Stock Insights aims to bring investors mid cap and large cap growth stock picks that will deliver market outperforming returns with limited downside risk. Each month, Top Stock Insights members will receive two new growth stock picks.

Top Stock Insights is an investment newsletter led by Ian Wyatt, a seasoned investment expert whose stock picks have been raking in gains for individual investors since 2001.

As the editor and chief investment strategist of Growth Report and Rising Star Stocks, Wyatt has delivered market outperforming average annual gains of +16.7% and +33.6%, respectively, since launching those investment newsletters in 2001 and 2004. Wyatt is an investment expert who has written for Marketwatch, and whose expertise has been written about or has contributed to Barron’s, Zacks Investment Research, Forbes.com, MSN Money and AOL Finance.

Visit Top Stock Insights today at to sign up for a free 30-day trial membership.

To try Top Stock Insights without cost, risk, or obligation – click here now: https://www.topstockinsights.com/s.cfm?oid=105&r=pr_110807.

“Large growth stocks continue to provide amazing returns for investors,” said Wyatt. “At Top Stock Insights, our research team strives to uncover large growth companies that are market leaders with proven financial performance, a distinct competitive advantage, an expanding market, and an attractive valuation that will allow our investment newsletter members to see big gains.”

Top Stock Insights is an online investment newsletter service that provides its members with a monthly investment newsletter available online and in print, weekly investment portfolio updates, regular buy and sell alerts, and regular special investment research reports.

Investors can start a 30-day risk-free trial membership online and lock in a $ 150 discount on an annual subscription. During the month of November, Top Stock Insights is discounted to $ 49.95 for the first year. Start a trial membership to the investment research newsletter by clicking here now: https://www.topstockinsights.com/s.cfm?oid=105&r=pr_110807.

Top Stock Insights is the latest investment newsletter service from Business Financial Publishing. Business Financial Publishing was founded in 2001 as an online publisher of investment information. The company’s well known investment services include Newsletter Advisors, SmallCapInvestor.com, Growth Report and Rising Star Stocks.

About Top Stock Insights

Top Stock Insights is an investment newsletter led by editor and chief investment strategist Ian Wyatt and his research team in Washington DC. Top Stock Insights provides its members with consistently reliable mid cap and large cap growth stock picks, uncovering companies with proven financial results, a competitive advantage, market growth drivers, and an attractive valuation. Top Stock Insights is published by the same investment research team that has provided investors with big gains through the Growth Report and Rising Star Stocks investment newsletter services.

###

©Copyright 1997-

, Vocus PRW Holdings, LLC.
Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.

Growth stocks can mean different things to different people, but I personally define a growth stock as being shares in a company that continues to increase both it’s earnings and dividends each year (and has a long history of doing so). So with that in mind, I want to talk about when you should sell these stocks, because this is very important. 

If you’re lucky enough to have found some good quality growth stocks and are sitting on some decent profits, then it can be tempting to bank your profits and reinvest the proceeds elsewhere. However, as Warren Buffett will tell you, this isn’t necessarily the best strategy. 

The best strategy, provided that you’re prepared to hold on to your shares for the long term, is to resist the temptation to sell and hold on for further gains. Yes there may be short-term fluctuations along the way, but providing that the company in question continues to increase both it’s earnings and dividends each year, there is no need to sell because the share price will eventually rise to reflect this continued growth. 

If you hold on to shares for as long as a company continues to grow and reinvest the dividends received each year, then you can be sure that you will be sitting on some substantial gains when you do finally decide to sell. This is something that Warren Buffett does to devastating effect. He simply looks for outstanding market-leading companies that continue to grow their profits each year, and holds on to these shares for years and years to benefit from both capital growth and dividends. 

It requires a great deal of patience because in the short-term the share price can fall in line with the overall market, but in the long-term it rewards you with some fantastic profits. The difficulty is finding the right companies to invest in, but there are some obvious candidates amongst some of the large-cap stocks. For example here in the UK Tesco is a fantastic company because it has a long history of growing both it’s earnings and dividends. Indeed I believe Buffett himself owns shares in Tesco at the time of writing. 

So to answer the original question of when should you sell your shares in growth stocks, you should hold on to your shares for as long as possible to benefit from both capital growth and dividend reinvestment. The only time you should consider selling is when there is a danger that the company may stop increasing it’s bottom line each year, maybe due to another major competitor gaining market share, for instance, because that will obviously mean that the share price is unlikely to continue rising in future years.

There are some fundamental things that a potential investor must consider before investing in a particular equity. These things are very important because they are the things that determines the success or otherwise of your investments. Growing your investments depends largely on you, the investor.

Some of the things to consider especially when investing in growth stocks are.
1) The management: Do they have a good management team that you believe can take the company to another level? What is the vision of those saddled with the responsibility of piloting the affairs of the company?
2) What is the financial state of the company? Are they struggling with depts. And mounting threatening loans from the banks, are they struggling to survive, or is the company financially stable? This is very critical for your investment decision.
3) Is the present economic situation of the country favorable for sub sector of the company you want to buy into or not?
4) What is the value of that particular stock? Is it fairly priced, over priced or under priced? All these are critical issues that must be carefully analyzed before investing.

It is not easy to figure out the best entry price for a fundamentally sound stock, but it is something that you must try and do before investing, if you really want to make a success in your investments.

An investor that identifies a growth stock will be tempted into investing all his funds into that particular stock hoping to compound wealth as the company grows, but this is not professional. It is important to know that opportunity does always exist in the stock market, so if the investor invests all his funds in one particular stock and the next moment, he sees another that is better, he will be left with nothing. I.e. you have locked yourself out of fresh opportunities.
So before investing, the first thing the investor must do is to decide on a strategy he wants to adopt in trading. He may decide to go for “value” stocks, or for “growth” stocks. Investing in both is not bad depending on your capital, however, professionally, it is better to focus on one. It is better to study the two and follow the one that best suites you. This will make you a better investor.

Some characteristics that are common with growth stocks are:
1) Average growth: If you look carefully, you will notice that the average revenue growth of these companies, compared with other companies not in this category is not the same, theirs is always higher.

2) They are mostly in the bracket of industrial sectors that are expanding continuously. They are not limited to a particular geographic or economic set-up.

3) They seldom pay dividends to their share holders.

4) Because of their aggressive marketing strategies, most of the times, their growth surpasses their earning forecasts.

5) How long you will hold your investment here is determined by the growth of the company.

In conclusion, investing in growth stocks is all about investing for the future. The investor must be able to predict whether such company will be able to maintain the tempo or not. This means that he must know in details, the plans of the company for the future. He must know their earning target for a year, their revenue base, plans for their sales promotions etc. Fortunately, it is very easy to get all these necessary information that one needs are available on the internet. With careful study and planned investment strategy, growth stocks can really take somebody from zero to hero within a little space of time.

Washington, DC (PRWEB) November 8, 2007

Growth stock investors looking for high quality investment research in the mid cap and large cap sectors can now turn to Top Stock Insights, which launched on November 8.

Top Stock Insights aims to bring investors mid cap and large cap growth stock picks that will deliver market outperforming returns with limited downside risk. Each month, Top Stock Insights members will receive two new growth stock picks.

Top Stock Insights is an investment newsletter led by Ian Wyatt, a seasoned investment expert whose stock picks have been raking in gains for individual investors since 2001.

As the editor and chief investment strategist of Growth Report and Rising Star Stocks, Wyatt has delivered market outperforming average annual gains of +16.7% and +33.6%, respectively, since launching those investment newsletters in 2001 and 2004. Wyatt is an investment expert who has written for Marketwatch, and whose expertise has been written about or has contributed to Barron’s, Zacks Investment Research, Forbes.com, MSN Money and AOL Finance.

Visit Top Stock Insights today at to sign up for a free 30-day trial membership.

To try Top Stock Insights without cost, risk, or obligation – click here now: https://www.topstockinsights.com/s.cfm?oid=105&r=pr_110807.

“Large growth stocks continue to provide amazing returns for investors,” said Wyatt. “At Top Stock Insights, our research team strives to uncover large growth companies that are market leaders with proven financial performance, a distinct competitive advantage, an expanding market, and an attractive valuation that will allow our investment newsletter members to see big gains.”

Top Stock Insights is an online investment newsletter service that provides its members with a monthly investment newsletter available online and in print, weekly investment portfolio updates, regular buy and sell alerts, and regular special investment research reports.

Investors can start a 30-day risk-free trial membership online and lock in a $ 150 discount on an annual subscription. During the month of November, Top Stock Insights is discounted to $ 49.95 for the first year. Start a trial membership to the investment research newsletter by clicking here now: https://www.topstockinsights.com/s.cfm?oid=105&r=pr_110807.

Top Stock Insights is the latest investment newsletter service from Business Financial Publishing. Business Financial Publishing was founded in 2001 as an online publisher of investment information. The company’s well known investment services include Newsletter Advisors, SmallCapInvestor.com, Growth Report and Rising Star Stocks.

About Top Stock Insights

Top Stock Insights is an investment newsletter led by editor and chief investment strategist Ian Wyatt and his research team in Washington DC. Top Stock Insights provides its members with consistently reliable mid cap and large cap growth stock picks, uncovering companies with proven financial results, a competitive advantage, market growth drivers, and an attractive valuation. Top Stock Insights is published by the same investment research team that has provided investors with big gains through the Growth Report and Rising Star Stocks investment newsletter services.

###

©Copyright 1997-

, Vocus PRW Holdings, LLC.
Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.

Rockville, MD (PRWEB) August 16, 2006 -–

According to Louis Navellier, Editor of Blue Chip Growth Letter, investors are making a mistake by defining “energy stocks” too narrowly.

In his recently-released report, “The Global Energy Crisis: Winners & Losers for the Second Half of 2006,” Navellier states, “There is plenty of diversification to be found in energy. Oil and the supporting drillers and refiners are just a start. Everybody knows about natural gas and nuclear energy, but few investors are aware of coal… let alone railroads.”

For example, Burlington Northern Santa Fe (BNI) should benefit from high oil prices in several ways. Burlington Northern is the second-largest railroad in the U.S., with a system covering 32,000 miles.

First of all, railroads are the transport of choice for both coal and the raw materials for ethanol.

Second, as gasoline and diesel prices rise, railroads become more cost-efficient and in demand. Carload freight recently jumped 5.3% after a big surge a year ago. And shipments of container units — in other words, general merchandise — rose 13.8%. A shortage of truckers, combined with higher trucking rates, spells a railroad bonanza.

For pure ethanol plays, Navellier recommends mammoth agricultural companies such as Monsanto (MON) because “Iowa is the Saudi Arabia of ethanol.” Monsanto’s chemically engineered corn produces higher yields and more starch for a greater output of ethanol.

Ethanol, the grain alcohol that went into gasohol in the 1970s, is now a much more efficient fuel source thanks to a number of biotech breakthroughs:

    ethanol costs less than gasoline to produce

    runs cleaner than gasoline

    comes from America’s heartland—not the Middle East

Today more than five million cars have already been fitted with flex-fuel engines that can run on ethanol. In fact, any car with a yellow gas cap is a flex-fuel (ethanol-ready) vehicle.

According to government reports, by the year 2030, ethanol will fuel 30% of America’s vehicles.

Nuclear power is another revival from the 1970s oil crises, when gasoline topping 50¢ a gallon caused public outcries.

Navellier’s favorite nuclear power play is Cameco (CCJ), which mines the yellowcake used to make uranium.

The company accounts for about 20% of the Western world’s uranium output and owns some of the best-known uranium mining sites: the McArthur River, Cigar Lake, and Rabbit Lake in Canada; plus two facilities in Wyoming and Nebraska. It also has interests in the Kyrgyz Republic and Mongolia.

It is projected to convert 5 million kilograms of uranium a year into uranium hexafluoride, or UF6, a compound that is used to create enriched uranium for nuclear reactors and weapons.

The report, “The Global Energy Crisis: Winners & Losers for the Second Half of 2006,” discusses oil as well as alternative energies. But Navellier recommends oil service companies over traditional oil companies.

For example, Halliburton (HAL), which recently split 2-for-1 and announced sales up 26% and earnings up 51%. Unfortunately, that was $ 0.01 below analysts’ estimates so they punished the stock, which may make it a better buy.

Oil refiner Valero Energy (VLO) refines low-cost residual oil and heavy crude into cleaner-burning, higher margin products, including reformulated gasoline and low-sulfur diesel fuel. It operates refineries in California, Colorado, Louisiana, New Jersey, Oklahoma, Texas, Canada and Aruba.

Twenty years ago, there were 282 refineries. Today, there are just 149. Refiners make their best profits when supplies are tight, and it doesn’t get much tighter than this.

Learn more about Louis Navellier’s recommendations online now in his new free energy report ““The Global Energy Crisis: Winners & Losers for the Second Half of 2006.” Individual investors may follow this link now and download a free copy of this report: http://investorplace.com/order/?pc=6TF196

About Blue Chip Growth

Blue Chip Growth helps subscribers beat the returns of the S&P 500 utilizing blue chip stocks. This advisory service covers the top 600 to 700 stocks (by market capitalization) including all the S&P 500 stocks. Recommendations in Blue Chip Growth have beaten the S&P 500 for seven of the last eight years.

###

©Copyright 1997-

, Vocus PRW Holdings, LLC.
Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.

Many of the best performing stocks in history have been growth stocks. Taser International went up in price over 2200% in about 10 months. Qualcomm increased about 2100% in 11 months. Yahoo went up over 6700% in 2 1/2 years. You have to know what to look for. You must trade them properly. You need to implement successfully proven, buying and selling rules. Doing all of that, you certainly could make a fortune trading growth stocks.
 
A growth stock is defined, as a stock of a company which is growing earnings and sales, faster than its industry or the overall market. Earnings are the number one factor when it comes to a stock’s price advancement. Most of the time, there is no legitimate reason for a stock to rise in price, unless it has decent earnings. The best performing growth stocks usually have exceptional earnings and sales.
 
The key to making big profits trading growth stocks, is having a trading plan that gives you an edge, or in other words, puts the odds in your favor. It is vitally important to put as many factors in your favor as possible before taking a position in the stock market.
 
The first factor I consider is the general market direction. The stock market needs to be in a confirmed uptrend. This is because about 75% of all stocks follow the general market trend. Growth stocks can correct double as much as other stocks during a downtrend. They also tend to make the biggest price advances when conditions are right. Knowing this, it is a must to properly analyze the trend of the stock market.
 
I look for fundamentally strong stocks, with excellent earnings and sales numbers. I search for younger, innovative companies with new exciting products and/or services. This tends to keep the company’s fundamentals strong for a long time. Great earnings are a must for growth stocks to do really well.
 
Technically, I want a stock to have built a sound base, or chart pattern. This includes a cup-shaped base, a double bottom, or my favorite, a flat base pattern. There are a few other historically proven patterns I watch for as well. The stock should be near or at, a 52-week high in price. Better yet, approaching or at, a new all-time high in price. At this point, I am looking for the stock to break through a key resistance area on heavy volume. This tells me big institutions are supporting the price advancement.
 
There are other fundamental and technical factors I consider before trading a growth stock, but this should give you a good idea of how it is properly done. As always, money management is critically important. You must keep all losses small. Implementing proper selling rules are also an important factor in your overall trading results. When traded properly, growth stocks offer tremendous profit potential.
 
 

Rockville, MD (PRWEB) August 16, 2006 -–

According to Louis Navellier, Editor of Blue Chip Growth Letter, investors are making a mistake by defining “energy stocks” too narrowly.

In his recently-released report, “The Global Energy Crisis: Winners & Losers for the Second Half of 2006,” Navellier states, “There is plenty of diversification to be found in energy. Oil and the supporting drillers and refiners are just a start. Everybody knows about natural gas and nuclear energy, but few investors are aware of coal… let alone railroads.”

For example, Burlington Northern Santa Fe (BNI) should benefit from high oil prices in several ways. Burlington Northern is the second-largest railroad in the U.S., with a system covering 32,000 miles.

First of all, railroads are the transport of choice for both coal and the raw materials for ethanol.

Second, as gasoline and diesel prices rise, railroads become more cost-efficient and in demand. Carload freight recently jumped 5.3% after a big surge a year ago. And shipments of container units — in other words, general merchandise — rose 13.8%. A shortage of truckers, combined with higher trucking rates, spells a railroad bonanza.

For pure ethanol plays, Navellier recommends mammoth agricultural companies such as Monsanto (MON) because “Iowa is the Saudi Arabia of ethanol.” Monsanto’s chemically engineered corn produces higher yields and more starch for a greater output of ethanol.

Ethanol, the grain alcohol that went into gasohol in the 1970s, is now a much more efficient fuel source thanks to a number of biotech breakthroughs:

    ethanol costs less than gasoline to produce

    runs cleaner than gasoline

    comes from America’s heartland—not the Middle East

Today more than five million cars have already been fitted with flex-fuel engines that can run on ethanol. In fact, any car with a yellow gas cap is a flex-fuel (ethanol-ready) vehicle.

According to government reports, by the year 2030, ethanol will fuel 30% of America’s vehicles.

Nuclear power is another revival from the 1970s oil crises, when gasoline topping 50¢ a gallon caused public outcries.

Navellier’s favorite nuclear power play is Cameco (CCJ), which mines the yellowcake used to make uranium.

The company accounts for about 20% of the Western world’s uranium output and owns some of the best-known uranium mining sites: the McArthur River, Cigar Lake, and Rabbit Lake in Canada; plus two facilities in Wyoming and Nebraska. It also has interests in the Kyrgyz Republic and Mongolia.

It is projected to convert 5 million kilograms of uranium a year into uranium hexafluoride, or UF6, a compound that is used to create enriched uranium for nuclear reactors and weapons.

The report, “The Global Energy Crisis: Winners & Losers for the Second Half of 2006,” discusses oil as well as alternative energies. But Navellier recommends oil service companies over traditional oil companies.

For example, Halliburton (HAL), which recently split 2-for-1 and announced sales up 26% and earnings up 51%. Unfortunately, that was $ 0.01 below analysts’ estimates so they punished the stock, which may make it a better buy.

Oil refiner Valero Energy (VLO) refines low-cost residual oil and heavy crude into cleaner-burning, higher margin products, including reformulated gasoline and low-sulfur diesel fuel. It operates refineries in California, Colorado, Louisiana, New Jersey, Oklahoma, Texas, Canada and Aruba.

Twenty years ago, there were 282 refineries. Today, there are just 149. Refiners make their best profits when supplies are tight, and it doesn’t get much tighter than this.

Learn more about Louis Navellier’s recommendations online now in his new free energy report ““The Global Energy Crisis: Winners & Losers for the Second Half of 2006.” Individual investors may follow this link now and download a free copy of this report: http://investorplace.com/order/?pc=6TF196

About Blue Chip Growth

Blue Chip Growth helps subscribers beat the returns of the S&P 500 utilizing blue chip stocks. This advisory service covers the top 600 to 700 stocks (by market capitalization) including all the S&P 500 stocks. Recommendations in Blue Chip Growth have beaten the S&P 500 for seven of the last eight years.

###

©Copyright 1997-

, Vocus PRW Holdings, LLC.
Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.

Many of the best performing stocks in history have been growth stocks. Taser International went up in price over 2200% in about 10 months. Qualcomm increased about 2100% in 11 months. Yahoo went up over 6700% in 2 1/2 years. You have to know what to look for. You must trade them properly. You need to implement successfully proven, buying and selling rules. Doing all of that, you certainly could make a fortune trading growth stocks.
 
A growth stock is defined, as a stock of a company which is growing earnings and sales, faster than its industry or the overall market. Earnings are the number one factor when it comes to a stock’s price advancement. Most of the time, there is no legitimate reason for a stock to rise in price, unless it has decent earnings. The best performing growth stocks usually have exceptional earnings and sales.
 
The key to making big profits trading growth stocks, is having a trading plan that gives you an edge, or in other words, puts the odds in your favor. It is vitally important to put as many factors in your favor as possible before taking a position in the stock market.
 
The first factor I consider is the general market direction. The stock market needs to be in a confirmed uptrend. This is because about 75% of all stocks follow the general market trend. Growth stocks can correct double as much as other stocks during a downtrend. They also tend to make the biggest price advances when conditions are right. Knowing this, it is a must to properly analyze the trend of the stock market.
 
I look for fundamentally strong stocks, with excellent earnings and sales numbers. I search for younger, innovative companies with new exciting products and/or services. This tends to keep the company’s fundamentals strong for a long time. Great earnings are a must for growth stocks to do really well.
 
Technically, I want a stock to have built a sound base, or chart pattern. This includes a cup-shaped base, a double bottom, or my favorite, a flat base pattern. There are a few other historically proven patterns I watch for as well. The stock should be near or at, a 52-week high in price. Better yet, approaching or at, a new all-time high in price. At this point, I am looking for the stock to break through a key resistance area on heavy volume. This tells me big institutions are supporting the price advancement.
 
There are other fundamental and technical factors I consider before trading a growth stock, but this should give you a good idea of how it is properly done. As always, money management is critically important. You must keep all losses small. Implementing proper selling rules are also an important factor in your overall trading results. When traded properly, growth stocks offer tremendous profit potential.
 
 

When you ask most investors for their preferred stocks, you’ll seldom hear them share a blue chip name like Johnson & Johnson, Kraft Foods or Wal-Mart. Instead they will tell you about some amazing growth stock that will be the next Google, Microsoft or Apple.

These investors believe that by simply buying growth stocks with the maximum earnings growth potential that they will make money. Sadly our research clearly shows this not to be true…not even close.

In this article we will dispel the myth about investing in growth stocks and shine the light on a path that has more consistently paved the way to profits.

Research Says…

We know that many of you are still shaking your heads in doubt. Certainly we must be joking, right? Unfortunately our research details beyond a shadow of a doubt the vast under performance of growth stocks over the past decade.

Stocks with the lowest projected growth rates actually generated the highest return of +5.4% per year. Yes, we know that doesn’t sound like much, but remember the average return of the S&P 500 over that stretch was an anemic -3.3% thanks to two ferocious bear markets.

Each level of additional earnings growth came with decreasing levels of profits for investors. As we look at the most aggressive growth stocks with 30%+ expected earnings growth, we find an embarrassingly low -9.7% return. This begs an obvious question…

Why Don’t Growth Stocks Pan Out?

The early investors in growth stocks generally do quite well. They take the early risk when almost no one has heard of the company. As the company bangs out earnings surprise after earnings surprise it gains more investor attention and a much higher share price.

However, at some point the company will be “priced for perfection”. Meaning that the PE gets too inflated as people are so sure that the good times will just keep rolling (think of a mini version of the late 90s tech bubble).

Unfortunately the exceptional growth stock rarely holds up over time. At some point, as the company tries to expand so rapidly, it will stumble. Even if that just means going from a 50% growth rate to a 40% growth rate. On the surface 40% still sounds great…but not to the investors who expected 50%+. So of course the growth stock will tank. And tank fast.

We are sure you’ve had a few of these growth stocks in your portfolio over the years. So we don’t have to prompt you how rapidly the losses add up. That, in a nutshell, is the danger of investing in growth stocks.

So What Does Work?

Indeed you could look at the stats and conclude that stocks with lower projected growth rates generally outperform. That is true. But we can do a heck of a lot better than that 5.4% return.

The key is to find growth stocks that exceed expectations no matter the growth rate. Meaning that a growth stock that is expected to grow profits by 5% and ends up growing by 7%, will do very well. Ditto for a growth stock expected to grow 30% that ends up at 35% actual earnings growth.

I know on the surface it sounds like you need a crystal ball to predict which companies will beat their earnings projections. Gladly it’s actually much easier than you think because Len Zacks has done the hard work for you.

In the mid-1970s Len Zacks realized that growth stocks that had big earnings surprises continued to outperform the market over the next several months (this is what academics call the Post Earnings Announcement Drift (PEAD)…yes, I know it sounds more like a medical problem than a means in which to invest in growth stocks).

But Len went a step further. He wanted to find indicators that would show him growth stocks more likely to have positive earnings surprises BEFORE they happened. If you could do that, then the odds of success were firmly stacked in your favor.

For the next several years Len worked feverishly to discover these indicators. Gladly for all of us he did find 4 leading indicators of future earnings surprises. Three of these measures are ways of looking at brokerage analyst earnings estimate revisions. The last being an analysis of past earnings surprises.

Each factor is potent by itself. Blending them together creates an almost unfair advantage for investors…that advantage is now called the Zacks Rank stock rating system.

I know you’ve probably heard this story countless times before from us that the Zacks #1 Ranked buy stocks have a 28% annualized return since 1988.

So if you’ve heard the story, then let me ask you a more personal question:

Why haven’t you used it???

Yes, it’s true the Zacks Rank is part of our Zacks Premium subscription service. But we give you a 30 day free trial to use this resource with absolutely no obligation to buy. And beyond the Zacks Rank for 4400 stocks, you also get our equity research reports, stock screening strategies and even our new mutual fund rank covering nearly 19,000 funds.

If you’ve had great success on your own as an investor, then don’t bother with this free trial. You are set. However, if you think your portfolio could do better, then please take me up on this invitation to try the Zacks Rank and all our other resources built to help you outpace the market.

About Zacks Premium Free Trial https://www.zacks.com/registration/free_trial_terms.php