Credo Technology Group (NASDAQ:CRDO) Passes Key Growth Stock Screen

For investors looking for a systematic way to find high-growth stocks, the method described in Louis Navellier's "The Little Book That Makes You Rich" presents a strong framework. The plan centers on eight basic rules meant to spot companies showing better earnings momentum, faster sales, growing profitability, and sound financial condition. By filtering for these particular factors, investors try to locate businesses set for major growth before the wider market completely sees their possibility.

One firm that recently appeared from such a filter is Credo Technology Group Holding Ltd (NASDAQ:CRDO), a creator of high-speed connectivity solutions for data infrastructure. A detailed look shows that CRDO displays a solid match with a number of Navellier's important growth ideas.

Match with Growth Factors

Credo’s latest financial results show the intense momentum the "Little Book" plan aims to find. The company is not only increasing, it is speeding up at a notable rate.

• Major Sales and Earnings Increase: The most notable numbers are in top and bottom-line growth. Credo's revenue increased 224% over the last year, while quarterly sales jumped 272% versus the same quarter last year. Even more notable is the earnings increase, with EPS rising 713% year-over-year and 857% on a quarterly basis. This meets Navellier's rules for rising sales and earnings growth, which are essential for any true growth stock.
• Positive Earnings Surprises and Revisions: Credo has regularly beaten analyst predictions, exceeding EPS estimates in each of the past four quarters by an average of 33%. Also, analysts have been actively increasing their projections, with the consensus estimate for the next quarter moved up by over 52% in the last three months. This mix of positive surprises and upward revisions is a central part of the plan, pointing to sound core business trends that are making the market reconsider the company's future.
• Growing Profitability and Sound Cash Flow: Increase is most useful when it is profitable. Credo's operating margin has grown significantly, rising by over 272 percentage points in the past year. At the same time, the company's free cash flow creation has jumped, with growth above 5,456% year-over-year. This fits with the rules for growing operating margins and sound cash flow, showing the company can turn sales into actual profits and financial room.
• Earnings Momentum and High Return on Equity: The plan highlights speed, not just increase. Credo's current quarterly EPS growth of 857% greatly exceeds the 600% growth from the similar quarter a year ago, showing positive earnings momentum. In addition, the company provides a solid Return on Equity (ROE) of 16.5%, easily passing the 10% level set by the filter, which points to efficient use of shareholder money.

Basic Health and Valuation Setting

A look at Credo's wider basic profile backs the idea from the filter. ChartMill gives the stock a good basic rating of 7 out of 10. The company's financial health is a specific strength, scoring a 9, supported by a clean balance sheet with no debt and very high liquidity measures. Profitability numbers are also sound, with sector-leading margins and returns on assets and invested capital.

The main area for thought is valuation. The stock sells at high earnings multiples, which is common for firms showing such fast growth. However, the review states that its low PEG ratio, which includes earnings growth, and its excellent profitability may support the high price. In short, the market is paying for future growth that, if it happens, could make the present price acceptable.

For a detailed view of these basic measures, you can see the full Credo Technology Group Fundamental Analysis.

A Top Choice for Growth-Centered Plans

Credo Technology Group offers a strong example of a company that meets a strict, rules-based growth filter. Its exceptional speed in revenue and earnings, along with regular earnings beats, upward analyst revisions, and quickly growing cash flow, meets many conditions for investors using methods like Navellier's. While the valuation requires notice, the core business momentum and financial health give a base for the growth story.

For investors wanting to find other companies that meet these strict growth conditions, the filter that found CRDO is open to the public. You can view the present results and change the settings to your own investment approach through this Little Book Strategy Stock Screen.

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Disclaimer: This article is for information only and does not make up financial advice, a support, or a suggestion to buy, sell, or hold any security. The "Little Book" plan is one of many investment methods, and past results of a filtering technique do not show future outcomes. Investors should do their own complete research and think about their personal financial position and risk tolerance before making any investment choices.