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" offers a strong framework. The plan is based on eight basic rules meant to find companies showing better earnings momentum, faster sales, increasing profitability, and good financial condition. By searching for these particular factors, investors try to find stocks set for possible strong performance. A recent use of this search has identified Kinross Gold Corp (NYSE:KGC) as a candidate that deserves more study.
Fitting the "Little Book" Factors
Kinross Gold seems to fit a number of Navellier's main growth filters, shown by its recent financial results. The company's performance indicates good momentum in important operational and profit measures.
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Positive Earnings Revisions & Surprises: A central part of the plan is finding companies where analyst predictions are increasing. Kinross displays a large upward revision for next quarter's EPS predictions, which have increased by 26.9% in the last three months. Also, the company has a perfect history of beating predictions, exceeding EPS estimates in all of the last four quarters by an average of 26.6%. Steady positive surprises can lead analysts to raise future estimates, a main factor for growth stock prices.
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Good Sales and Earnings Growth: The plan requires clear growth. Kinross reports notable year-over-year revenue growth of 36.9% and even higher quarterly sales growth of 42.9%. More importantly, earnings growth is increasing quickly. The company's year-over-year EPS growth is 172.1%, while its latest quarter-over-quarter EPS growth jumped 235%. This speed increase, where current quarterly growth is much higher than the 81.8% growth from the same quarter a year before, is a sign of positive earnings momentum, another main rule in the book.
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Increasing Profitability and Good Cash Flow: Growing sales are most useful when paired with increasing margins. Kinross shows this with its operating margin growth of 57.5% over the last year, meaning the company is turning more revenue into profit. Also, good and increasing free cash flow is necessary for funding operations and growth without too much debt. Kinross's free cash flow increased by 87.2% in the last year, meeting the plan's need for financial soundness.
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High Return on Equity: The last rule looks for efficient use of shareholder money. Kinross provides a Return on Equity (ROE) of 31.6%, much higher than the plan's lowest limit of 10%. A high ROE indicates the company is skilled at creating profits from its equity, a signal of management skill and a lasting competitive edge.
Fundamental Condition and Valuation Setting
Beyond the specific search factors, a wider view of Kinross's fundamentals gives more setting. According to ChartMill's detailed fundamental analysis report, the company gets an overall score of 7 out of 10. The report notes outstanding profitability, with margins and returns on capital placed near the best in the Metals & Mining industry. Financial condition is also a positive, with a firm balance sheet, workable debt levels, and good liquidity.
From a valuation view, the stock seems fairly priced compared to both its industry and the wider market. Its Price-to-Earnings and Price-to-Forward-Earnings ratios are lower than a large majority of similar companies. While future growth predictions are more moderate than its recent fast past performance, the current valuation may already account for this, possibly offering a buffer.
A Candidate for More Study
Kinross Gold Corp presents a strong example of a company now passing a strict growth stock search. Its performance across earnings revisions, surprises, sales and profit growth, cash flow creation, and return on equity matches closely with the disciplined method supported by Navellier. For investors using this or similar growth-centered methods, KGC justifies more study to decide if its operational path and current valuation match their particular investment idea and risk comfort.
It is key to recall that a search result is a beginning for study, not a final suggestion. The "Little Book" search is made to methodically find possible candidates, and Kinross is one of them. You can review the present results of this search and change the factors yourself through this link: Louis Navellier's Little Book Screen.
Disclaimer: This article is for information only and does not form financial advice, a support, or a suggestion to buy, sell, or hold any security. The "Little Book" search method is one of many investment plans, and past performance of a search or a security does not predict future results. Investors should do their own complete study and think about their personal financial situation and risk comfort before making any investment choices.