Course 406:
Slow-Growth Stocks
In this course
1 Introduction
2 How Fast Is the Company Growing?
3 How Consistently Is the Company Growing?
4 Does the Company Generate a Dependable Stream of Free Cash Flow?
5 What's the Company Doing with Its Money?
6 What's the Return on Capital?
7 How Has the Stock Performed?
8 Is the Stock Priced Like a Slow Grower?
9 Conclusion: What Do I Get in Return?

Slow-growth companies are just what the name implies. These are companies that have increased their sales and earnings over at least three years, but at less than the rate of GDP (gross domestic product) growth. Slow growth is not necessarily a stigma. Many companies in this category are remarkably consistent, posting rising earnings year in and year out, and that dependability helps compensate for their slow growth. Most important, any company, no matter how slow growing, can make a terrific investment if the price is right. Procter & Gamble PG fits the slow-growth mold for two reasons. First, it's big. Aside from phenomenal companies such as Coca-Cola KO or Microsoft MSFT, few companies with annual sales pushing $40 billion can consistently post rapid profit growth. Eventually, companies exhaust their best investment ideas, and the law of diminishing returns sets in. Second, P&G operates in industries--cleaning and food products--that are mature in the big markets of North America and Europe.

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