New Gold Inc. (NYSEARCA:NGD) Embodies a High-Growth Stock Strategy

For investors looking for a systematic way to find high-growth companies, the framework in Louis Navellier's "The Little Book That Makes You Rich" presents a strong methodology. The strategy rests on eight basic rules meant to find stocks with better earnings momentum, speeding growth, and sound financial health. By filtering for companies that fit these particular standards, investors try to locate businesses that are not only growing, but whose growth is speeding up and being supported by analysts and cash flows.

One present name that appears from such a filter is New Gold Inc. (NYSEARCA:NGD), a Canadian intermediate gold mining company with operations in Ontario and British Columbia. An examination of its recent financial results shows why it matches several of Navellier's main growth ideas.

Earnings Momentum and Revisions

A key part of the strategy is finding positive earnings revisions and surprises, as upward analyst changes can point to basic business strength. New Gold does well here:

• The average EPS estimate for the next quarter has been raised by 10.58% over the last three months.
• The company has reported a positive earnings surprise in each of the last four quarters, with an average beat of 47.2%.

This steady pattern of beating estimates is a notable signal, as it makes the market constantly reassess the company's future profit potential, a process Navellier points to as a main factor for stock price gains.

Strong Growth Path

The "Little Book" strategy focuses on not only growth, but speeding growth in both sales and earnings. New Gold's recent numbers are notable:

• Revenue Growth: Quarterly sales jumped 83.5% year-over-year, while trailing twelve-month revenue increased 44.2%.
• Earnings Growth: Quarterly EPS rose by 212.5% compared to the same quarter last year. On a trailing twelve-month basis, EPS growth is a high 309.1%.

This performance is more than simple growth; it shows clear speeding up. For example, the current quarterly EPS growth of 212.5% is much higher than the growth rate from the similar quarter a year before (166.7%), meeting the strategy's "positive earnings momentum" rule.

Improving Profitability and Cash Flow

Growth is most useful when it leads to better profitability and cash creation. Navellier's rules look for widening operating margins and good cash flow, signs of efficient scaling.

• New Gold's operating margin has widened significantly, increasing by 195% over the past year to a solid 36.1%.
• Possibly even more notable is the company's free cash flow creation, which increased by 389% over the last twelve months.

This high cash flow growth gives the company financial room to pay for more exploration, lower debt, or give capital to shareholders, lessening the need for outside funding.

High Return on Equity

The last rule looks for a high return on equity (ROE), which shows how well a company creates profits from shareholder investments. New Gold's ROE of 20.1% is good, showing efficient use of capital and putting it near the top of its industry group.

Fundamental Rating and Valuation Context

ChartMill's fundamental analysis report gives New Gold a rating of 6 out of 10. The report points out an uncommon and positive mix: very good growth and valuation scores along with high profitability, though it mentions some issues about financial health, mainly linked to short-term liquidity ratios.

From a valuation view, the stock seems fairly priced compared to its growth. While its standard P/E ratio is close to the market average, its forward P/E of 7.33 and low PEG ratio indicate the market may not be completely accounting for its expected earnings growth of over 30% each year. You can see the complete, detailed analysis in the fundamental analysis report for NGD.

Conclusion

New Gold Inc. offers a strong example of a company currently displaying the traits looked for by the "Little Book" growth strategy. It shows notable momentum, with analysts increasing estimates after a series of large earnings surprises. Its growth rates in sales, earnings, and cash flow are not just high but speeding up, and this widening is leading to clearly better profitability and returns. While investors must always think about sector-specific risks and the company's mentioned liquidity situation, the numerical profile matches well with a systematic growth investing method.

For investors wanting to use this method to find other possible candidates, the filter based on Louis Navellier's eight rules is ready to examine. You can find more results from this growth filter here.

Disclaimer: This article is for information only and does not make up financial advice, a suggestion, or an offer or request to buy or sell any securities. The information shown is based on data thought to be reliable but is not certain. Investors should do their own research and talk with a qualified financial advisor before making any investment choices.