Course 406: Slow-Growth Stocks
Is the Stock Priced Like a Slow Grower?
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?

For a slow-growth company to make an attractive investment, it had better be priced like a slow grower. Paying a high multiple for the earnings of a historically slow-growing company is basically a bet that the future will turn out better than the past--always a risky wager to make, especially with this type of stock. Procter & Gamble's valuations were somewhat high at the end of 1999--higher than those of the S&P 500. That premium was justified, given the company's remarkably steady performance up to that time. However, the plunge in P&G's stock price in early 2000 brought its valuations in line with those of the broader market--justifiably so, given the market's lower expectations for the company.

Next: Conclusion: What Do I Get in Return? >>


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