For investors looking for a disciplined, rules-based way to find high-growth companies, the method in Louis Navellier's "The Little Book That Makes You Rich" offers a strong framework. The plan centers on eight basic pillars meant to find companies showing better financial momentum, from positive earnings revisions and surprises to faster sales and rising profitability. This organized filter looks for businesses that are not only growing, but whose growth is speeding up and being recognized by the market. A recent check using this plan has identified Amphenol Corp. , Class A (NYSE:APH) as a stock that deserves more attention from growth-focused investors.
A Good Fit for the "Little Book" Rules
Amphenol, a top designer and maker of electrical, electronic, and fiber optic connectors, seems to fit well with many of Navellier's important growth rules. The supplied screening data shows a company in a strong growth period.
Positive Earnings Revisions & Surprises:
A central idea of the plan is that upward changes in analyst estimates often come before positive price movement. Amphenol displays a notable 14.04% rise in the next quarter's EPS estimate over the last three months, showing growing confidence from analysts. Also, the company has a flawless history of beating expectations, with 4 positive EPS surprises in the last 4 reports and an average surprise of 15.07%. This steady pattern of doing better than forecasts is a sign of companies with excellent operations and a chance for future estimate increases.
Strong and Speeding Growth:
The plan requires not just growth, but faster growth in both sales and earnings. Amphenol's figures here are impressive:
- Sales Growth: Revenue jumped 51.71% year-over-year (TTM), with the newest quarter growing 49.12% compared to the same quarter last year.
- Earnings Growth: EPS growth is more notable, up 76.72% year-over-year and 76.36% in the latest quarter.
- Earnings Momentum: Importantly, the current quarterly EPS growth (76.36%) is much greater than the growth rate from the similar quarter a year ago (34.15%), confirming the speed-up that growth investors want.
Rising Profitability and Good Cash Creation:
Growth is most useful when it is profitable and creates cash. Amphenol's operating margin increased by a notable 21.42% over the past year, showing the company's skill in turning higher sales into even larger profits. This rise in operating margin is a main filter in the "Little Book" screen. Also, the company's free cash flow—important for funding growth and shareholder returns—rose sharply, with free cash flow growth of 103.70% over the past year.
High Return on Equity:
The last rule looks for a high return on equity (ROE), which gauges how well a company creates profits from shareholder money. Amphenol's ROE of 31.84% is a strong number, pointing to very effective management and a good competitive place in its field.
Basic Health and Price Context
A look at Amphenol's wider fundamental analysis report gives background for these screening results. The report gives APH a good total rating of 7 out of 10, noting its outstanding profitability measures, which place in the best group of its Electronic Equipment, Instruments & Components industry. Its growth rating is also good (8/10), backed by the high past growth rates found in the screen.
The main point of care comes from the price view, where the stock gets a rating of 4. With a P/E ratio over 43, the stock is valued above both the S&P 500 and its industry average. However, the analysis states that its excellent profitability and expected future earnings growth of over 20% might support this higher multiple for some investors. The financial health rating is acceptable (6/10), showing good cash availability but a greater use of debt financing than some similar companies.
Is It a Match for Growth Investors?
For investors using the "Little Book" method, Amphenol presents a strong example. It meets several important conditions: strong earnings momentum, speeding top and bottom-line growth, rising margins, and excellent returns on equity. The stock shows the kind of basic strength the screen is made to find. While its high price suggests it is not free of risk, especially if growth rates slow, the clear financial momentum is evident.
The present positive directions in both the long-term and short-term S&P 500 give a generally helpful setting for growth stocks showing such traits.
Interested in seeing other companies that pass this strict growth screen? You can locate and adjust the "Little Book" screening template here: View the Screening Results.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any security. The "Little Book" screening method is one of many investment plans, and past results of a screening rule or a single stock do not guarantee future outcomes. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment choices.
