When to sell a fast grower?
• End o the rapid growth
• Same store sales are down 3 percent in the last quarter
• New store results are disappointing
• Two top executives and several key employees leave to join rival firm
• The company recently returned from a “dog and pony” show, telling an extremely positive storey to institutional investors in twelve cities in two weeks
• The stock is selling at a p/e of 30, while the most optimistic projections of earnings growth are 15-20 percent for the next two years.
How to check fast growth stock?
• What the growth rate in earnings has been in recent years?
• The company has duplicated its successes in more than one city or town, to prove that expansion will work
• The company still has room to grow
• Whether the stock is selling at a p/e ration at or near the growth rate
• Whether the expansion is speeding up or slowing down?
• Few institutions own the stock and only a handful of analysts have ever heard of it
