For investors looking for a mix of expansion possibility and careful spending, the "Growth at a Reasonable Price" or "Affordable Growth" method presents a considered middle path. This method tries to find companies that are increasing their earnings and sales at a good rate and are also priced at levels that are not extreme. It avoids the high risk of expensive, unprofitable growth stocks and the stagnant companies common in value investing. By concentrating on businesses with good basics, including sound financial statements and consistent earnings, together with fair prices, this method works to lower risk while still taking part in a company's positive path.
A recent search for these "Affordable Growth" possibilities has pointed to AngloGold Ashanti PLC (NYSE:AU), a worldwide gold mining business with varied operations in many countries. The search looked for stocks with good expansion, acceptable earnings and financial soundness, and a price that is not too high. AngloGold Ashanti's basic profile indicates it could match this investment idea, offering a situation where business progress aligns with a moderate market valuation.
A Base of Good Expansion
The central idea of any expansion-centered method is, expectedly, expansion. AngloGold Ashanti shows solid expansion measures, in both its recent results and its planned future path. This is important for the Affordable Growth method, as it looks for companies with clear business progress, not only a low stock price.
- Strong Recent Earnings: The company's Earnings Per Share grew by a very high 517.47% over the last year, a number fueled by increased gold prices and better operations.
- Continued Past Expansion: Over a longer time, the company has kept a good average yearly EPS growth rate of 16.81%, showing steadiness beyond one year's jump.
- Good Sales Increase: Sales growth has also been good, rising by 26.43% last year and averaging 10.45% yearly in recent years.
- Positive Future View: Experts predict this progress will continue, with estimated yearly EPS growth of almost 15% and sales growth of over 13% in the next few years.
This mix of notable past results and a hopeful future view gives the "expansion" part that forms the first support of the search conditions.
Price: Expansion at a Fair Cost
Finding expansion is only part of the task; paying a logical cost for it is what describes the "affordable" part of the method. An overpriced stock can remove the gains of even the best expansion. AngloGold Ashanti's price measures suggest the market may not be completely valuing its chances.
- Good Future Earnings Multiple: While the normal Price-to-Earnings ratio of 22.66 seems high, the more future-focused Price/Forward Earnings ratio is at a much more moderate 11.95. This shows the market is pricing next year's expected earnings at a clear reduction.
- Industry and Market Measure: Based on its future P/E, AU is priced lower than about 81% of similar companies in the Metals & Mining industry. It also trades at a clear reduction to the S&P 500's average future P/E of 24.29.
- Accounting for Expansion: The PEG Ratio, which changes the P/E ratio for expected expansion, shows a low price relative to the company's expansion rate. This is a central measure for GARP investors, as it directly connects price to expansion possibility.
These price factors are needed for the method because they help make sure an investor is not paying too much for future expansion, giving a buffer for safety.
Supporting Basics: Earnings and Soundness
Lasting expansion cannot exist alone; it must be supported by a profitable business plan and a firm financial setup. The Affordable Growth search requires acceptable scores in these areas to filter out risky or poor companies. AngloGold Ashanti does well here, especially in earnings.
- High Earnings: The company gets a top-level earnings rating. Central measures like Return on Equity (32.17%) and Return on Invested Capital (23.07%) put it in the highest group of its industry, showing very effective use of investor money.
- Increasing Margins: Its Profit Margin of 24.58% and Operating Margin of 37.97% are not only high but have been rising steadily, showing operational efficiency and pricing strength.
- Firm Financial Soundness: The company keeps a strong balance sheet, with a good Debt-to-Equity ratio of 0.28 and an Altman-Z score of 6.62, which shows a very low short-term chance of financial trouble. Its ability to make cash is also good, with a Debt-to-Free-Cash-Flow ratio under 1.
These strengths in earnings and financial soundness are what make the expansion story believable and lasting, lowering the risk for investors.
Summary
AngloGold Ashanti PLC presents a profile that matches the goals of an Affordable Growth investor. It displays strong, quickening expansion in earnings and sales, trades at a price that seems fair, especially on a future basis, and is supported by high-level earnings and a firm balance sheet. This mix indicates a company that is performing well in a positive commodity setting without being given a high-risk premium by the market.
For investors curious about reviewing other companies that meet similar conditions of good expansion, fair price, and sound basics, more results from this Affordable Growth search can be seen here.
A full look at AngloGold Ashanti's basic ratings, including the complete study across expansion, price, earnings, soundness, and dividend, is in its basic report.
Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own study and think about their personal financial situation and risk comfort before making any investment choices.
