Navellier Growth: your source for market-beating growth stocks

 

Recently, I mentioned that a key in how to invest during these volatile market conditions is earnings growth. I even dropped the name of a video-game software publisher that has delivered the type of powerful performance that is the hallmark of a great growth company. Last quarter, its revenues were up 80%, earnings almost doubled and profit margins were at an all-time high. In a month's time, the stock is already up 25% for my Blue Chip Growth subscribers.

Today, I'd like to take this earnings growth approach a step further and offer more context as to why – and how – I've come to rely on this strategy in deciding how to invest.

My Emerging Growth subscribers know the drill, which is why the average stock on my Buy List is characterized by 42.7% annual sales growth and 147.3% annual earnings growth. In general, subscribers to all four of my publications are poised to take advantage of the stagflation environment that currently exists. When slow economic growth and high inflation in food and crude oil prices are the status quo, investors are squeezed into a narrow, fundamentally focused stock market environment. It's from within this crevice, however, that my subscribers traditionally prosper.

Instead of limiting ourselves to the moment, it's important to keep in mind a long-term view of the market. A company's earnings essentially denote profitability – the better the earnings, the greater the profitability. Real earnings are compared to analysts' expectations. If earnings fall short of the latter, a company's stock price usually falls. On the flipside, when earnings exceed expectations, a company's stock price usually surges.

I'm a numbers guy. Trust me when I say that growth can be measured. Analysts issue estimates – educated guesses, but guesses nonetheless. Even the best analysts will be wrong from time to time. But my stock-picking method relies solely on quantitative and statistical analysis. I let the numbers take me by the hand and lead the way!

And what a trip it is! Just take a look at some of the gains my subscribers are reaping:

• Mechel OAO (MTL), up 86.7% in 29 weeks
• Baidu.com Inc (BIDU), up 74.5% in 40 weeks
• Gerdau S.A. (GGB), up 53.9% in 11 weeks

What's more, if a company demonstrates positive earnings growth and forces analysts to revise estimates higher, it paves the way for earnings surprises. Stocks with positive earnings surprises are the superstars of the growth stock world. Furthermore, the surprises tend to persist, which means stocks that surprise one quarter are likely to surprise again.

My earnings growth investment strategy has proven itself repeatedly as an effective strategy for how to invest, guiding my subscribers to higher profits. Don't miss out on the chance to enhance your wealth by becoming a member of any one of my four publications: Blue Chip Growth, Emerging Growth, Quantum Growth, and Global Growth. Find out more about which one is right for you…

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