Course 403: Speculative-Growth Stocks
Is Sales Growth Outpacing Asset Growth?
In this course
1 Introduction
2 Is Sales Growth Outpacing Asset Growth?
3 What's the Growth Trend?
4 Are Net Margins on the Rise?
5 Is the Business Generating Cash?
6 What Has Growth Done to the Balance Sheet?
7 How Has the Stock Performed?
8 Is it Fairly Valued?
9 Conclusion: Numbers Matter

The speculative-growth market is full of companies that are doubling their sales by doubling their assets. This is a legitimate way to expand. Investors pour additional capital into the business, which drums up new sales. Eventually (we hope), the company reaches a critical mass at which it becomes a big moneymaker. But to limit risk, we can focus on companies that are making more efficient use of their assets as they expand, generating rising sales on each $1 of capital. Yahoo has done pretty well on this front. Between 1997 and 1998, its sales grew 189%, but its assets grew even faster, at 333%. In 1999, though, Yahoo's sales started to grow faster than its assets, indicating that it's starting to squeeze more growth out of its assets. That tells us that Yahoo is growing quickly, but prudently.

Next: What's the Growth Trend? >>


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