When screening for growth stocks, investors look at the following metrics:
• Revenue growth. Growth stocks should be seeing rapid expansion in sales. Consider both backward-looking reported sales growth in addition to forward-looking analyst expectations for future sales growth.
• Earnings growth. Like with revenue, growth stocks should be demonstrating strong profit growth.
• Share price gains. Rapid earnings and sales growth provide a strong foundation for stock performance that outpaces peers.
• Sustainable debt load. Growth companies with too much debt can run into trouble and run out of growth. High debt loads are not in and of themselves a bad thing, but a growth company needs to maintain a sustainable level of debt.
Most importantly, growth stocks are companies offering products or services that truly change how people live their lives.
