For investors looking for a methodical way to find companies with high growth, the principles in Louis Navellier's "The Little Book That Makes You Rich" offer a strong framework. The method is built on eight basic rules meant to find stocks with better earnings momentum, faster sales, and rising profitability. It is a growth-focused approach that searches for companies not only expanding, but doing so at a quickening rate with sound financial condition. A recent filter using these rules has identified Hecla Mining Co (NYSE:HL) as a candidate for more review.
Meeting the Eight Rules of Growth
A look at Hecla Mining's recent financial results shows a strong match with Navellier's main criteria. The company's numbers display the notable operational and financial momentum the method aims to find.
- Positive Earnings Revisions & Surprises: Analysts have greatly increased their short-term forecasts, with the average estimate for next quarter's EPS moved up by 61.1% in the last three months. Also, Hecla has a history of beating those forecasts, exceeding consensus EPS estimates by an average of 24% over the last four reported quarters.
- Quickening Growth: The company is showing very strong growth in sales and profits. Revenue rose 53% year-over-year and an even greater 79.5% quarter-over-quarter. More importantly, earnings growth is speeding up. The latest quarter's EPS grew 450% against the same quarter last year, a large jump from the 200% growth seen in the earlier comparable period.
- Widening Profitability & Strong Cash Flow: Hecla's operational efficiency is getting better noticeably, with its operating margin growing by over 202% in the past year. This growth, together with rising revenue, has resulted in very strong cash production, with free cash flow growth above 8,000% year-over-year.
- High Return on Equity: The company produces a good return on shareholder equity, with a current ROE of 12.39%, easily passing the method's 10% minimum level and pointing to good use of invested capital.
These numbers together show a company in a strong growth period. The large earnings revisions and surprises indicate Wall Street is adjusting to better fundamentals. The quickening in sales and earnings, combined with large cash flow and margin growth, are signs of the operational strength and momentum that Navellier's method is built to identify.
Fundamental Condition and Valuation Context
Beyond the specific filter criteria, a wider view of Hecla Mining's fundamental profile gives needed context. According to ChartMill's full assessment, the company gets a good overall fundamental score of 6 out of 10. Its advantages are especially clear in profitability and financial condition.
The company's margins are solid, doing better than most of its competitors in the Metals & Mining industry. Financially, Hecla keeps a sound balance sheet with a good debt-to-equity ratio and very good liquidity, showing no short-term solvency issues. The growth score is backed by very strong past results, though analysts expect a more measured growth path in the next few years.
On valuation, the situation is varied. While the stock's price-to-earnings ratio seems high on an absolute basis, it matches industry averages. More forward-looking measures, like the price-to-free-cash-flow and enterprise-value-to-EBITDA ratios, indicate the valuation is reasonably good compared to the sector, particularly when noting the company's high profitability.
You can see the full fundamental review for Hecla Mining here: HL Fundamental Analysis Report.
Considerations for Investors
For an investor using the "Little Book" method, Hecla Mining presents a strong example. The company's financial outcomes over the past year fit almost every requirement for large, high-quality growth. The method is naturally momentum-based, looking for stocks where fundamental gains are most sharp and probably not yet completely seen in the price.
Still, investors must note the natural cycles of the mining sector and commodity prices, which can cause swings. Also, while past growth has been unusual, the filter uses recent historical information. The method's success depends on ongoing tracking to see if the growth path is maintained or starts to slow.
Finding Similar Opportunities
Hecla Mining was found using a set filter based on Louis Navellier's eight rules. Investors wanting to find other companies that currently fit these strict growth standards can examine and adjust the filter themselves: View the "Little Book" Growth Stock Screen.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. The "Little Book" method and any related filters are examples of a system, not guarantees of future performance. Investors should do their own complete research and think about their personal financial situation and risk tolerance before making any investment decisions.