Shooting Stocks

Follow the clues growth managers look for to pick stocks that are ready to soar

requires a good amount of research beyond the setting of screens. We suggest that you take a look at a company’s annual report and read through whatever articles you can find on the Internet or at your local library. Another resource, says Goodwin, is a company’s Website, where you’ll often find annual reports and other background information on its businesses and prospects.

“I think you should look at research as a continuous project,” she says. “You should monitor anything you put your money into-the family car, your air conditioner and definitely your investments.”

Screening For Growth
Using six criteria, we came up with a list of 15 growth stocks. We searched for stocks with: A recent upside earnings surprise; projected average annual earnings growth of 10% over the next five years; a P/E to earnings growth ratio of 2 or less; one-year sales growth; a return on equity of 20% or higher; and debt to capital of 40% or less.

Company (Exchange: Ticker)

Price*

Est. 5-Year Ave. Annual EPS Growth

P/E to Earnings Growth (PEG)

Sales Growth (1-Year)

Return On Equity

Debt to Capital

Fossil Inc. (Nasdaq: FOSL) $39.00 20.4% 0.87 27.9% 33.7% 0.0%
Metro Networks Inc. (Nasdaq: MTNT) 53.50 22.0 1.34 2573.3 27.5 0.0
Stillwater Mining Co. (ASE: SWC) 30.00 25.5 0.85 298.5 21.5 19.7
Dycom Industries Inc. (NYSE: DY) 45.50 20.3 1.39 57.2 23.9 18.0
Lands’ End Inc. (NYSE: LE) 41.75 15.3 1.37 179.0 23.9 0.0
Symantec Corp. (Nasdaq: SYMC) 24.63 19.3 0.66 863.6 31.9 0.0
RF Micro Devices Inc. (Nasdaq: RFMD) 53.25 42.0 1.14 645.8 41.3 15.3
American Eagle Outfitters (Nasdaq: AEOS) 45.63 23.4 1.15 264.8 79.8 0.0
Knight/Trimark Group (Nasdaq: NITE) 43.25 31.0 1.13 311.7 99.0 0.0
Adaptec Inc. (Nasdaq: ADPT) 32.44 21.0 0.99 3168.4 22.7 23.0
Siebel Systems Inc. (Nasdaq: SEBL) 47.06 26.1 2.00 492.3 26.1 0.0
Alliance Capital Management (NYSE: AC) 29.69 15.3 0.86 36.2 84.6 38.9
The TJX Companies Inc. (NYSE: TJX) 30.25 17.1 1.05 154.4 44.2 15.3
QUALCOMM Inc. (Nasdaq: QCOM) 102.75 31.1 1.41 133.6 32.4 38.1
Applied Materials (Nasdaq: AMAT) 66.00 23.8 1.21 26.2 27.0 16.5
*As of 6/14/99
Source: Marketplayer.com; Yahoo Finance; Zacks Investment Research
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