For investors looking to balance the search for growth with fiscal care, the "Affordable Growth" or "Growth at a Reasonable Price" (GARP) method offers a solid middle path. This method looks for companies with good growth paths, but importantly, not with overly high prices. The aim is to not pay too much for future promise while still benefiting from upward movement. Looking for stocks with high growth marks, good profit and financial strength, and at least a fair price score can help find such chances. One company that recently came from this search is COEUR MINING INC (NYSE:CDE), a varied precious metals producer.
A Notable Growth Picture
The base of any affordable growth pick is, expectedly, growth. Coeur Mining shows this clearly, getting a high Growth Rating of 9 out of 10 from ChartMill’s fundamental review. The company’s recent financial results have been very good, pushed by the increased output of its main Las Chispas mine in Mexico.
- Strong Recent Growth: Over the last year, the company reported a 423.53% rise in Earnings Per Share (EPS) and a 96.41% jump in Revenue. This points to a significant operational turning point.
- Good Historical Pattern: Reviewing the last several years, the growth story stays firm, with an average yearly EPS growth of 30.97% and Revenue growth of 21.39%.
- Positive Future View: Experts think this pace will keep going, though at a slower rate, with expected average yearly EPS growth of 23.68% and Revenue growth of 16.05% in the next few years.
This mix of very good past results and a sound expected future growth rate is just what growth-focused investors seek. It implies the company is not just a short-term event but is creating lasting operational size.
Price: Fair Considering the Outlook
A high-growth story often has a high cost. Yet, for a stock to be "affordable growth," its price must not be too high. Coeur Mining’s Valuation Rating of 7 suggests the market may not be completely counting its growth path, showing a possible chance.
- Future Measures Are Strong: While the normal Price-to-Earnings (P/E) ratio seems high, the more future-focused Price/Forward Earnings ratio of 9.64 shows a different view. This ratio is much lower than both the current S&P 500 average and most (83.75%) of its peers in the Metals & Mining industry.
- Growth Adjustment: The low PEG Ratio, which changes the P/E for growth, shows the stock’s price is fair when its high earnings growth rate is considered.
- Cash Flow Price: The stock also looks good on a Price/Free Cash Flow basis, trading lower than more than three-quarters of its industry rivals.
This price view is key to the GARP method. It means that investors are not needing to pay extra for Coeur’s growth now; instead, they may be getting a high-growth profile at a price more often linked with slower-growing companies.
Supporting Basics: Profit and Financial Strength
Lasting growth cannot stand alone, it must be backed by good operations and a firm balance sheet. Coeur Mining scores well here, with a Profitability Rating of 8 and a Financial Health Rating of 7. These scores give trust that the company’s growth is of good quality.
Profit Strengths:
- The company has very good margins, with a Profit Margin of 28.30% and an Operating Margin of 36.31%, doing better than most of its industry.
- Returns on capital are firm, with a Return on Invested Capital (ROIC) of 11.57% that tops over 80% of industry peers.
Financial Strength Points:
- Solvency is a main plus. The company has a very low Debt-to-Free Cash Flow ratio of 0.51, meaning it could pay off all its debt in just over six months with its current cash flow, a sign of great financial room.
- Liquidity is sound, with a Current Ratio of 2.47, showing more than enough short-term assets to cover near-term needs.
These points are needed for the affordable growth idea. Good profit suggests the growth is turning into real earnings strength, while a healthy balance sheet gives the steadiness to handle economic changes and pay for future growth without too much risk.
Conclusion
Coeur Mining presents a strong example for the Affordable Growth investment method. The company is in a period of significant growth, shown by its high Growth Rating and strong recent financial numbers. Importantly, this growth seems reachable at a fair price, as noted by its good forward P/E and PEG ratios. This pairing of high growth and fair price is the core idea of the GARP method. Also, the company’s good profit measures and firm financial strength provide a base that suggests this growth is lasting and not built on financial tricks.
For investors wanting to review other companies that match this profile of good growth, sound basics, and fair price, more results from the "Affordable Growth" search can be found here.
Disclaimer: This article is for information only and does not make up financial advice, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own study and talk with a qualified financial advisor before making any investment choices. The fundamental review mentioned is given by ChartMill and can be seen in full here.