For investors looking for a systematic way to find high-growth stocks, the method in Louis Navellier's "The Little Book That Makes You Rich" provides a strong framework. The plan centers on eight basic rules meant to find companies showing better earnings momentum, faster sales, rising profitability, and sound financial condition. By filtering for these particular factors, investors try to locate businesses that are not only growing, but doing so with better efficiency and favorable analyst views.
PTC Inc (NASDAQ:PTC) stands out as a prospect that fits well with this orderly growth investing method. The Boston software company, a top provider in computer-aided design (CAD) and product lifecycle management (PLM) solutions, seems to be performing well on many of Navellier's important measures.
Fitting the "Little Book" Standards
A check of PTC's recent results indicates it satisfies or goes beyond many of the exact limits set by the plan's filtering rules. The given data forms an image of a company in a solid growth period.
- Positive Earnings Revisions & Surprises: Analyst opinion is a central part of the plan. PTC displays a 7.58% increase to the next quarter's EPS forecast over the past three months, showing more confidence. Also, the company has reported four straight positive earnings surprises in its last four statements, with an average exceedance of 33.52%. Steady overperformance makes analysts adjust their models, a main factor for momentum.
- Faster Sales and Earnings Growth: The plan looks for companies where growth is not only there, but speeding up. PTC's revenue increased 23.62% year-over-year (TTM), while quarterly sales jumped 21.36%. More significantly, earnings growth is very high, with EPS up 73.62% over the last year and a notable 74.55% in the latest quarter. This quickening in profit is precisely what the method looks for.
- Rising Profitability and Sound Cash Flow: Growth is most useful when it reaches the net income. PTC's operating margin has risen by a strong 55.14% over the last year, showing the company is turning more sales into profits more effectively. This is supported by solid cash production, with free cash flow increasing 48.72% year-over-year, giving financial room.
- High Return on Equity: The last rule stresses efficient use of shareholder money. PTC's Return on Equity (ROE) is 21.30%, well above the plan's 10% lowest limit and showing management is productively creating profits from the equity put into the business.
Basic Condition and Value Setting
Apart from the exact filter standards, a wider view of PTC's basic profile backs the investment idea. According to ChartMill's detailed basic report, PTC gets a good total score of 7 out of 10. Its advantages are especially clear in Profitability (score: 9) and Condition (score: 7).
- The company has top-level margins in its field, including a Gross Margin of 84.23% and an Operating Margin of 39.28%, putting it in the best group of its software competitors.
- Financial stability is sound, with a good Altman-Z score and a controlled debt amount, pointing to a firm financial foundation for ongoing growth.
On value, the view is more mixed. While PTC's Price-to-Earnings (P/E) ratio of 18.45 is seen as high on its own, it is priced lower than about 74% of its industry competitors and a bit under the present S&P 500 average. For growth investors using Navellier's system, a higher value can be accepted by exceptional growth and profit measures, which PTC now shows.
A Prospect for Growth-Oriented Portfolios
For investors using the "Little Book" plan, PTC Inc offers a strong example. The company is not simply growing; it is reaching the exact signs of quality growth the method highlights: increasing analyst forecasts, steady earnings exceedances, faster sales and profits, rising margins, and high returns on capital. This mix indicates a business with operational speed and financial control.
It is key to remember that the plan is not static. As Navellier states, market situations can alter which factors are best compensated. So, PTC, like any stock, should be watched for continued fit with these growth rules.
Interested in reviewing other companies that meet this strict growth filter? You can locate and adjust the filter yourself using the Little Book That Makes You Rich screener on ChartMill.
Disclaimer: This article is for information only and does not form financial guidance, a suggestion, or a bid or request to buy or sell any securities. The review is based on given data and a particular investment method. Investors should do their own research and think about their personal money situation before making any investment choices. Past results do not guarantee future outcomes.
