Growth investors consistently search for companies showing quickening financial results, a method summarized in eight main rules by Louis Navellier in his book, The Little Book That Makes You Rich. This approach centers on finding stocks with solid forward motion in earnings, sales, and profit, founded on the idea that good directions in these basic areas frequently come before notable stock price gains. A recent filter using Navellier's standards has identified Hecla Mining Co (NYSE:HL), a major silver producer, as a possible option for more detailed review by growth-focused investors.
A Good Fit for Navellier's Growth Rules
The center of Navellier's method is a group of eight numerical filters made to identify bettering company condition. Hecla Mining's latest financial reports display a notable match with a number of these important rules, indicating a time of solid operational and financial forward motion.
- Positive Earnings Revisions & Surprises: Analysts raising their estimates is a main sign of basic strength. Hecla has had the average EPS estimate for the next quarter raised by 57.06% over the previous three months. Also, the company has surpassed earnings predictions in three of the last four quarters, with an average surprise of 19.94%. This repeated capacity to beat cautious estimates can lead to more positive revisions.
- Rapid Growth in Sales and Earnings: Quickening top and bottom-line growth is the sign of a genuine growth stock. Hecla's measurements here are especially notable:
- Revenue increased 53.03% year-over-year and a notable 79.49% quarter-over-quarter.
- Earnings growth is even more distinct, with EPS growing 330% over the last year and 375% in the latest quarter compared to the same time last year.
- Growing Profitability and Solid Cash Flow: Growing sales alone is insufficient; a company must turn that growth into greater profits. Hecla's operating margin has grown by a notable 202.71% over the past year. At the same time, its free cash flow—important for supporting growth and benefiting shareholders—has risen by over 8,096%, showing very solid cash creation from its activities.
- High Return on Equity: This rule calculates how well a company creates profits from shareholder equity. Hecla's Return on Equity (ROE) of 12.39% not only meets Navellier's lowest limit but also puts it in front of almost 80% of similar companies in the Metals & Mining industry, meaning efficient use of investor money.
Basic Condition and Valuation Setting
Beyond the specific filter standards, an inspection of Hecla's wider basic profile gives important setting. According to ChartMill's review, Hecla gets a good total Fundamental Rating of 6 out of 10. The company grades especially well on Profitability and Financial Health, with industry-best margins and a very solid balance sheet marked by low debt and high liquidity.
The Growth rating is backed by the rapid past growth rates mentioned above, although analysts predict a more moderate view for the next few years, with expected EPS growth near 5% and a small drop in revenue. This future-looking moderation points out a main part of the Navellier method: it is naturally momentum-based, concentrating on shown, recent quickening instead of long-term predictions.
On Valuation, the view is varied. Hecla sells at a higher price based on its trailing P/E ratio. However, its Price-to-Free Cash Flow ratio is more appealing compared to the industry, and its low PEG ratio—which includes earnings growth—implies the current price might give some balance for its recent rapid growth path. You can review the complete, detailed basic review for HL here.
End and Points for Investors
Hecla Mining shows a notable example of a company now displaying the strong basic momentum looked for by the "Little Book" method. The match with rules about earnings surprises, striking sales and profit growth, margin growth, and solid cash flow creation is evident. For investors using this growth-centered filter, HL stands as a leading example of the kind of stock the process is made to find.
However, investors must think about the natural instability and cyclical nature of the mining sector, which is greatly affected by commodity prices for silver and gold. The filter is a beginning step for finding, not a final buy sign. The large gap between the exceptional past growth and the quieter future estimates points out the need for ongoing watching to decide if the present momentum can continue.
This filter is active and can find new possibilities as company reports are refreshed. To see the present list of stocks meeting the Louis Navellier "Little Book" filter and to change the standards based on your own market view, you can open the filter directly here.
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Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer or request to buy or sell any securities. The review uses data thought to be dependable, but its correctness cannot be assured. Investing includes risk, including the possible loss of original investment. You should do your own study and talk with a qualified financial advisor before making any investment choices.
