Every company goes through stretches of poor performance--slumping sales, maybe even negative profits--but a quality company will have a proven record of long-term growth. One good standard is to look for companies with growth above that of the overall economy over the past five years. Not a high hurdle, to be sure, but one that eliminates stagnant firms and firms lacking long-term records (and most stocks touted by stock-market hucksters). Dell Computer DELL, for example, has generated annual sales growth of about 50% over the past five years. Few companies can do that every year, but a record of reasonably solid growth (say 20%) over a reasonably long period of time (say five years) is a definite plus.
Second Quality Check: Profitability >>