Amphenol Corp. (NYSE:APH) Screens as a Top Growth Stock Using Navellier's "Little Book" Rules

Growth investing methods often look for companies that are not only increasing in size, but are doing so with faster speed and better financial performance. One organized method for locating these stocks is presented in Louis Navellier’s The Little Book That Makes You Rich, which lists eight basic rules meant to find excellent growth stocks. These rules concentrate on good earnings adjustments and surprises, rising sales, widening margins, solid cash flow, earnings increases, good earnings speed, and a large return on equity. A recent filter using this process has identified Amphenol Corp. Class A (NYSE:APH) as a stock that deserves more study.

A Detailed View of the "Little Book" Rules

The center of Navellier's method is to sort for companies showing basic soundness across several, simultaneous measures. Amphenol, a top designer and maker of electrical and fiber optic connectors, seems to match these ideas well based on its latest financial reports.

• Good Earnings Adjustments & Surprises: The method values analyst opinion and a company's track record of regularly beating forecasts. Amphenon displays soundness here, with the average EPS forecast for the next quarter increasing by 15.8% over the previous three months. Also, the company has reported a good earnings surprise in all of the last four quarters, with an average beat of 16.5%. These upward adjustments and steady overperformance point to business speed that may not be completely shown in earlier forecasts.

• Solid and Speeding Increase: Real growth investing needs more than just good numbers, it looks for a quickening pace. Amphenol's latest reports display strong growth patterns:

  • Sales increase (Q2Q): 53.4%
  • Revenue increase (Y2Y): 47.4%
  • EPS increase (Q2Q): 86.0%
  • EPS increase (Y2Y): 66.9%

  Importantly, the present quarterly EPS increase of 86% is much greater than the increase rate from the same quarter a year earlier (28.2%), showing good earnings speed, another main part of the method.

• Widening Earnings and Solid Cash Creation: Increase is most useful when it becomes more profitable. Amphenol's operating margin has widened by 17.7% over the last year, showing the company's skill to turn higher sales into operating income more effectively. At the same time, its free cash flow, a key sign of financial soundness and adaptability, has risen by 75.1% over the same time. This solid cash creation backs the business's growth plans and offers a cushion against economic shifts.

• Large Return on Equity: The last rule stresses efficient use of shareholder money. Amphenol's return on equity (ROE) is 30.5%, a number that puts it in the leading group of its industry. A large and steady ROE shows that management is using capital well to create profits.

Basic Review Summary

A wider check of Amphenol's basic profile, as described in a detailed review report, gives the stock a score of 7 out of 10. The report notes several main strong points that add to the "Little Book" filter findings:

• Outstanding Earnings: The company gets a 9 out of 10 for earnings, with industry-leading measures for Return on Assets, Return on Equity, and Operating Margin.
• Solid Growth Path: With a growth score of 8, the review confirms solid past growth in both revenue and earnings, with forecasts for this growth to keep going and even speed up in the next few years.
• Fair Price Considering Circumstances: While standard price-to-earnings measures seem high, the report states that the stock's low PEG ratio, which includes earnings growth, and its excellent earnings may support the higher price. Its Price/Free Cash Flow ratio is also more appealing compared to industry peers.

The main areas marked for review connect to financial soundness (score of 6), where an increasing debt-to-equity ratio is mentioned, although it is balanced by very solid free cash flow coverage of that debt.

A Stock for the Growth-Oriented Investor

For investors using a method like the one Navellier outlines, Amphenol Corp. Class A offers a strong example. It is not simply growing, it is performing well across several areas the method considers key: surprising analysts, speeding sales and earnings, widening margins, creating solid cash, and delivering large returns on equity. This multi-sided soundness indicates a business with operational speed.

It is key to recall that a filter result is a beginning for more study, not a final suggestion. The wider basic review supports the filter's findings, especially around earnings and growth, while giving background on price and balance sheet factors.

Locate Other Possible Stocks

The filter that found Amphenol is open to the public and can be used to find other companies now meeting the "Little Book" rules. You can view and adjust this filter here.

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Disclaimer: This article is for information only and is not financial guidance, a support, or a suggestion to buy, sell, or keep any security. Investing has risk, including the possible loss of the original amount invested. Readers should do their own full research and think about their personal financial situation and risk comfort before making any investment choices.