Investors are always looking for methods to find companies that might achieve greater growth. One organized method is described in Louis Navellier's "The Little Book That Makes You Rich," which simplifies growth investing into eight basic rules. These rules target companies showing solid and quickening financial results, especially in earnings, sales, and profit. The method stresses not only growth, but the character and speed of that growth, looking for businesses that regularly outperform predictions and enhance their operational effectiveness.
A recent filter using Navellier's eight points has identified NUTEX HEALTH INC (NASDAQ:NUTX) as a possible option for investors using this idea. The Houston company, running micro-hospitals, specialty hospitals, and offering population health management services, seems to match many of the method's central principles.
Match with the "Little Book" Points
The filter uses exact numerical limits from Navellier's eight rules. A look at Nutex Health's recent finances shows a clear match with these growth-focused measures:
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Positive Earnings Revisions & Surprises: A central part of the method is that analyst estimate changes and earnings outperformance show basic strength. For NUTX:
- The average EPS estimate for the next quarter has been raised by 205.36% in the last three months.
- The company has reported a positive earnings surprise in 3 of its last 4 quarterly results, with an average outperformance of 2,386.61%.
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Quickening Sales and Earnings Growth: The method looks for companies where growth is not only happening but speeding up.
- Sales growth is strong, with a year-over-year (TTM) rise of 236.03% and a quarter-over-quarter jump of 239.87%.
- Earnings growth is more marked, with EPS increasing 873.64% year-over-year and 551.16% quarter-over-quarter.
- Importantly, the current quarterly EPS growth of 551.16% is much higher than the growth from the same quarter a year ago (-14.67%), showing solid positive earnings speed, another key rule.
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Growing Profit and Solid Cash Creation: Navellier's approach values companies that turn sales growth into greater profit and cash flow.
- Nutex Health's operating margin has grown by 278.08% over the last year, pointing to better cost control and scalability.
- Free cash flow, an important sign of financial condition and flexibility, has increased by 3,319.34% in the past twelve months.
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High Return on Equity: The last rule centers on efficient use of shareholder money. Nutex Health reports a Return on Equity (ROE) of 35.96%, which shows the company is creating significant profit compared to the equity put into the business.
Basic Condition and Valuation Setting
Outside the specific filter points, a wider basic review of Nutex Health shows a company in good financial condition with what seems a fair valuation. The company's balance sheet indicates high liquidity, with current and quick ratios above 3.0, and acceptable debt levels that are sufficiently supported by its solid free cash flow. Profit measures are notable strong points, with operating and profit margins placed in the top groups of its Health Care Providers & Services industry group.
Maybe most notable is the valuation view. Even with the fast growth measures, NUTX trades at a Price-to-Earnings (P/E) ratio near 6.05 and a Forward P/E of 5.22. These numbers are not only much lower than the wider S&P 500 averages but also less expensive than most of its industry peers. This mix of high growth and low multiples shows the typical "growth at a reasonable price" (GARP) situation many investors look for. A complete list of these basic points is in the full Nutex Health basic report.
A Comment on Market Conditions
While the basic filter finds qualifying companies, market setting is always a factor. At this time, the S&P 500 shows a varied technical view, with a negative long-term direction but a positive short-term direction. In this setting, stocks showing solid, company-specific growth reasons, like those pointed out by the Little Book filter, may receive specific notice as investors search for steady performance within wider market unpredictability.
Finding More Options
Nutex Health acts as a real example of how Navellier's growth investing ideas can be used numerically. For investors wanting to find other companies that currently meet this strict set of growth and speed filters, the filter is open to the public. You can see the whole list of qualifying stocks and change the points using your own study by going to the Little Book That Makes You Rich screening template.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any securities. The information given is from supplied data and should not be the only ground for an investment choice. Investors must do their own complete study and think about their personal financial situation and risk comfort before any investment.