In the world of growth investing, strategies that methodically find companies with solid and quickening business momentum are highly desired. One such approach is detailed in Louis Navellier’s "The Little Book That Makes You Rich," which condenses the search for excellent growth stocks into eight basic rules. These rules center on positive earnings revisions and surprises, quickening sales and earnings growth, widening profitability, strong cash flow, and high returns on equity. The aim is to find companies not only growing, but doing so with rising efficiency and momentum that can lead to stock price gains. A recent filter built on these ideas has pointed to Insulet Corp (NASDAQ:PODD) as an interesting candidate for investors using this structured method.
Fitting the "Little Book" Criteria
Insulet, the maker of the Omnipod tubeless insulin delivery system, shows solid agreement with Navellier’s growth filters. The company’s recent financial results display the sort of quickening operational quality the method aims to find.
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Positive Earnings Revisions & Surprises: Analysts have been increasing their expectations for Insulet, with the average EPS estimate for the next quarter moved higher by 9.59% over the last three months. This fits the filter’s need for positive revisions and implies building confidence in near-term results. Also, the company has a flawless history of surpassing expectations, beating EPS estimates in each of the last four quarters by an average of 16.19%. Steady positive surprises are a central idea of the method, as they frequently lead analysts to raise future estimates, creating a positive cycle for the stock.
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Quickening Growth in Sales and Earnings: The method favors companies where growth is not only present but speeding up. Insulet’s revenue growth is solid, with year-over-year sales up 27.12% and quarter-over-quarter growth at 29.86%. More significantly, earnings momentum is evident: the most recent quarter’s EPS grew 37.78% year-over-year, a marked increase from the 26.76% growth recorded in the similar quarter a year before. This quickening in earnings growth is a direct match to Navellier’s "Positive Earnings Momentum" rule and signals the company is converting its sales growth into even quicker profit increase.
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Widening Profitability and Solid Cash Flow: Growth is most beneficial when it becomes more profitable. Insulet’s operating margin has widened by 12.32% over the past year, showing the company is successfully controlling costs as it gets larger. This widening is important for lasting long-term value creation. In addition, the company’s free cash flow—the essential resource of a growth business—has surged, growing by a remarkable 2,854.73% over the past year. This large increase gives Insulet significant financial room to fund innovation, marketing, or strategic projects without needing outside financing.
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High Return on Equity: The final part of the method looks for productive use of shareholder capital. Insulet performs here too, with a Return on Equity (ROE) of 17.79%. This not only meets the filter’s minimum requirement but puts the company in the leading group of its industry peers, indicating management is productively creating profits from the equity invested in the business.
Fundamental Condition and Valuation Setting
An examination of Insulet’s wider fundamental view supports the idea from the "Little Book" filter. The company receives a good overall fundamental score of 7 out of 10, with specific force in its Growth and Profitability measures. The condition of its balance sheet is also scored well, with a strong Altman-Z score pointing to low bankruptcy risk and acceptable debt levels compared to its large cash flow.
Valuation, however, shows a more detailed view. The stock sells at a higher price based on standard price-to-earnings multiples, which is typical for high-growth companies in the medical technology field. Still, when measured against its industry peers, Insulet’s valuation seems more acceptable. The main point for growth investors is if the company’s outstanding growth path supports the price. With analysts forecasting annual EPS growth of 28.13% and revenue growth of 20.59% in the coming years, the case for a growth premium is supported. A more detailed view of these scores is available in the full fundamental analysis report.
Conclusion
For investors using a method like the one in "The Little Book That Makes You Rich," Insulet Corp offers a clear example of a company meeting several important growth indicators. It joins strong top-line increase with quickening bottom-line growth, bettering operational efficiency, and outstanding cash flow creation—all while productively using shareholder capital. While the stock’s valuation needs thoughtful review, its fundamental momentum matches closely with the standards made to find companies set for possible strong performance.
The filter that found Insulet is based on a particular setup of Louis Navellier’s eight rules. Investors curious about finding other companies that currently pass this strict growth filter can see the full filter results here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investing involves risk, including the potential loss of principal. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
