The strategy outlined in Louis Navellier’s The Little Book That Makes You Rich focuses on identifying growth stocks with strong financial momentum, profitability, and accelerating earnings. By screening for eight specific criteria, from positive earnings revisions and expanding margins to high return on equity, the approach aims to find companies that are not only growing but doing so efficiently and with improving fundamentals. One stock that stands out when applying this screen is CNX RESOURCES CORP (NYSE:CNX), a natural gas producer with operations in the Marcellus and Utica shale plays.
Recent Performance and Growth Metrics
CNX delivers strong performance across several of the screen’s key growth criteria, which are designed to capture companies with accelerating sales and earnings. The company’s sales growth is impressive: revenue over the past trailing twelve months (TTM) increased by 23.54% year-over-year, and when comparing the most recent quarter to the same quarter last year, sales surged by an extraordinary 346.99%. This dramatic quarterly spike, while partly due to base effects, signals a strong inflection in business activity.
Earnings growth is equally solid. CNX posted year-over-year EPS growth of 40.78% over the TTM, and the most recent quarter’s EPS grew 17.54% compared to the same quarter a year ago. The screen also looks for accelerating earnings momentum, and CNX delivers here as well: the current quarter-over-quarter EPS growth rate is higher than the prior period’s, indicating positive momentum. This aligns with Navellier’s emphasis on earnings acceleration as a driver of future price appreciation.
Profitability and Operational Efficiency
Beyond growth, the strategy places a premium on profitability and expanding margins. CNX’s operating margin improved by 186.12% over the past year, a dramatic expansion that suggests the company is scaling efficiently. The operating margin now stands at 39.79%, and profit margin is 32.32%—both among the best in its industry. Return on equity (ROE) is 14.60%, comfortably above the screen’s 10% minimum threshold, confirming that the company generates strong returns on shareholder capital.
Earnings Surprises and Revisions
A core tenet of the little book method is that upward earnings revisions and positive surprises often precede stock gains. CNX has beaten analysts’ EPS estimates in each of the last four quarters, with an average beat of 48.36%. This track record of consistently exceeding expectations is a strong signal that the company is executing better than anticipated. Moreover, the average EPS estimate for the next quarter has been revised upward by 27.56% over the last three months, reflecting growing confidence from analysts.
Cash Flow Strength
Free cash flow growth is another critical filter, as it indicates whether a company can fund its own expansion. CNX’s free cash flow grew by 93.86% over the past year, far exceeding the 15% minimum set by the screen. This cash generation provides financial flexibility and reduces reliance on external financing.
Fundamental Rating Summary
At a high level, CNX’s fundamentals earn a rating of 5 out of 10 when compared to 209 industry peers in the Oil, Gas & Consumable Fuels sector. The company scores excellent on profitability (7/10), with strong margins and return metrics, and growth (7/10), driven by double-digit EPS and revenue expansion. Valuation also scores well (7/10), with a trailing P/E of 15.04—below both the industry average of 27.92 and the S&P 500’s 27.71—suggesting the stock may still offer value despite its growth. However, financial health is a relative weakness (3/10), due to a low current ratio and an Altman-Z score below the safe zone, which investors should monitor.
For a detailed breakdown of these metrics, see the full fundamental analysis report.
Valuation and Analyst Views
Despite strong growth, CNX does not appear overvalued. The trailing P/E of 15.04 and forward P/E of 13.47 are both below industry medians, while the enterprise value-to-EBITDA ratio ranks cheaper than 76.56% of peers. The PEG ratio, which adjusts the P/E for expected earnings growth, suggests the stock is fairly valued given a projected 25.08% annual EPS growth rate over the coming years. Analysts appear to agree: the upward estimate revisions and consistent beats imply a constructive outlook.
More Opportunities
This stock is just one example of the type of company that fits the little book strategy. To explore more stocks that meet these eight growth-focused criteria, you can access the full screen and customize the filters to your own preferences via the ChartMill Little Book screener.
Conclusion
CNX Resources Corp. ticks nearly every box in Navellier’s little book framework: accelerating sales and earnings, expanding margins, strong free cash flow growth, and a consistent record of beating analyst estimates. While its financial health requires scrutiny, the combination of solid growth and reasonable valuation makes it a notable candidate for growth investors following this disciplined, fundamentals-driven approach.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making any investment decisions.