Growth investing methods often look for companies that are not only increasing in size, but are doing so with faster speed and better financial performance. One organized method for locating these stocks is presented in Louis Navellier's "The Little Book That Makes You Rich," which lists eight important rules for choosing excellent growth stocks. These rules center on favorable earnings adjustments and surprises, rising sales, growing margins, solid cash flow, earnings increases, positive earnings speed, and a high return on equity. The aim is to create a collection of companies showing basic soundness and the possibility for continued, above-market results.
A recent filter created from these ideas has pointed to Nutex Health Inc (NASDAQ:NUTX) as a stock needing more detailed study. The Houston-based company, which runs micro-hospitals, specialty hospitals, and population health management networks, seems to display a number of the high-growth traits that Navellier's system aims to find.
How NUTX Matches the "Little Book" Rules
The filter uses particular, measurable limits for each of Navellier's eight rules. A look at Nutex Health's recent financial numbers shows a notable match with these growth requirements.
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Positive Earnings Revisions & Surprises: Analyst opinion is a key part of the method. NUTX displays a 43.7% upward revision for next quarter's EPS estimates over the last three months, a clear sign that experts are becoming more confident in its short-term future. Also, the company has a history of beating predictions, reporting three positive earnings surprises in its last four reports with an average beat of a remarkable 2,386.6%.
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Fast and Speeding Growth: The method requires solid sales growth and profit speed. NUTX performs clearly here:
- Sales Growth: Year-over-year revenue growth is at 236.0%, while the latest quarter saw sales jump 239.9% compared to the same time last year.
- Earnings Growth & Speed: The company's earnings per share grew 873.6% over the past year. Importantly, it shows positive earnings speed: the latest quarterly EPS growth of 551.2% is much greater than the growth rate from the similar quarter a year before, which was negative.
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Getting More Profitable and Efficient: Growth is most useful when it becomes more profitable. NUTX shows its operating margin grew by 278.1% over the past year, meaning it is handling its sales growth effectively. This is backed by a very high Return on Equity (ROE) of 36.0%, showing the company creates significant profit from money shareholders have invested.
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Solid Cash Creation: Finally, growth must be paid for, and good cash flow gives that option. NUTX's free cash flow grew by a huge 3,319.3% over the past year, giving it plenty of means to put money back into growth, reduce debt, or follow other plans without needing much outside money.
Basic Soundness and Price Context
Beyond the specific filter rules, a wider basic study of Nutex Health gives important background. According to ChartMill's full basic report, NUTX gets an overall score of 7 out of 10. The report points out two especially solid areas:
- Price: The stock gets a full 10 on price measures. With a Price/Earnings (P/E) ratio of 5.5 and a Forward P/E of 4.7, it is priced lower than about 96-99% of similar companies in the Health Care Providers & Services industry and well under the wider S&P 500 average. This implies the market may not yet be completely valuing its recent growth path.
- Growth: The company gets an 8 for growth, mirroring its high historical gains in both revenue and earnings, as well as solid analyst predictions for future growth.
The report also mentions good financial condition, with acceptable liquidity and debt scores, though its profitability rating is more middle due to a varied history of yearly profits. The present high margins and returns suggest a possible basic change is happening.
A First Step for More Study
The match with Louis Navellier's growth filters makes Nutex Health a notable candidate for investors concentrating on high-speed, basically improving companies. The mix of high sales and earnings growth, rising cash flow, upward analyst revisions, and a very low price presents an uncommon picture.
It is important to remember that filters are first steps, not final choices. Investors should do their own complete research, thinking about parts like the company's business plan, competitive field, management performance, and the durability of its growth rates, especially given its recent change to profitability.
This filter changes, and other companies may now match or pass these strict growth rules. You can see the newest results and change the limits yourself by looking at the live "Little Book" filter on ChartMill.
Disclaimer: This article is for information and learning only and does not make investment advice, a suggestion, or an offer or request to buy or sell any securities. The information given is based on supplied data and should not be the only reason for any investment choice. All investing has risk, including the chance of losing the original amount. Past results do not show future outcomes. You should do your own research and talk with a qualified financial advisor before making any investment choices.
