In the world of growth investing, strategies that methodically find companies with solid and quickening business momentum are highly desired. One such structured method is described in Louis Navellier's The Little Book That Makes You Rich, which lists eight basic rules for choosing better growth stocks. These rules center on earnings revisions, surprises, sales and earnings growth, margin improvement, cash flow health, and high returns on equity. The aim is to find companies not only expanding, but doing so with rising efficiency and profit, often before the wider market completely sees their possibility. A recent filter using this approach has identified SSR Mining Inc (NASDAQ:SSRM) as a candidate worth further study.
Matching the "Little Book" Rules
SSR Mining seems to fit well with many of Navellier's main ideas, shown by its recent financial results. The filter's criteria and the company's reported numbers tell a account of solid operational and financial momentum.
- Positive Earnings Revisions & Surprises: A key part of the method is that analyst estimate changes can be an early signal. For SSRM, the average EPS estimate for the next quarter has increased by 15.55% over the last three months, showing rising analyst belief. Also, the company has a complete history of four positive earnings surprises in its last four reports, with an average beat of 84.08%. This steady capacity to beat forecasts is a main quality Navellier looks for, as it often pushes future estimates upward.
- Strong Sales and Earnings Growth: Real growth stocks must show top-line increase. SSR Mining displays notable momentum here, with year-over-year revenue growth of 63.68% and quarter-over-quarter sales growth of 61.42%. More importantly, the earnings growth is even more marked. The company's year-over-year EPS has jumped by 614.29%, while the most recent quarter saw a large 780% increase compared to the same quarter last year. This major quickening in profit fits the "Positive Earnings Momentum" rule, which looks for companies where growth rates are rising.
- Improving Profitability and Solid Cash Flow: Growth is most useful when it is profitable and efficient. SSR Mining's operating margin has improved by an notable 181.26% over the past year, showing the company is turning more of its growing sales into operating income. At the same time, its free cash flow—important for funding operations and growth—has increased by 333.69%. This pairing of improving margins and high cash generation relates directly to rules four and five, pointing to a high-quality growth profile.
- High Return on Equity: The last rule stresses efficient use of shareholder capital. SSR Mining's Return on Equity (ROE) of 11.28% meets the filter's minimum level of 10%, showing it is creating an acceptable profit on the equity invested in the business.
Fundamental Condition and Valuation Setting
Beyond the specific filter rules, a look at SSR Mining's wider fundamental picture gives needed setting. According to ChartMill's study, the company has an overall Fundamental Rating of 7 out of 10. The report notes a notable mix of positives and points for investors.
- Profitability is a clear positive, with margins and returns on capital that do better than a large part of its peers in the Metals & Mining industry.
- Growth numbers are very solid, both in its recent strong performance and in its future estimates, where revenue is expected to keep growing at a healthy rate.
- Valuation seems appealing. The stock trades below both industry peers and the wider S&P 500 on several main measures, including Price/Earnings and Price/Forward Earnings ratios. This makes a situation where solid growth is combined with a fair price.
- Financial condition shows a varied picture. While the company has a very workable debt level and good liquidity, some solvency ratios, like the Altman-Z score, show it is in a middle area compared to industry norms, needing notice.
For a complete look at these ratings, you can see the full fundamental analysis report for SSRM.
A Candidate for Growth-Oriented Methods
SSR Mining's success in a filter based on Louis Navellier's method suggests it has the sort of fundamental momentum that growth investors aim for. The company is not simply expanding, it is doing so with quickening earnings, improving margins, and healthy cash flow, all while analysts are actively lifting their short-term expectations. This profile usually fits longer-term position trading or buy-and-hold methods centered on benefiting from a company's growth phase. However, the pure momentum in the numbers may also draw shorter-term swing traders looking for stocks with solid fundamental support.
It is key to recall that this filter is a beginning for study, not a buy list. The "Little Book" method itself accepts that market situations can change which factors are most successful. Also, as a commodity producer, SSR Mining's results is linked to gold and silver prices, adding a macroeconomic factor that must be weighed.
Interested in finding other stocks that currently pass this growth-oriented filter? You can locate and adjust the "Little Book" screening model for your own study here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. The "Little Book" filter is a model based on past rules and may not be right for all investors. You should do your own complete research and think about your personal financial position and risk tolerance before making any investment decisions.