Page 1066 - How to Make Money in Stocks Trilogy

52 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

Big Rock #2: Focus on Companies with

Big Earnings Growth and a New, Innovative
Product or Service

Big, Accelerating Earnings Growth is
the #1 Factor in Choosing a Stock

It’s the primary trait that attracts fund managers and other institutional
investors—the big players that provide the needed fuel for a stock’s big run.
And what drives that explosive earnings growth? It’s usually a game-
changing product or service, new management, a major new industry
trend—or some combination of all of the above.
Just think back to some of the biggest winners over the last 100+ years.

IBM: In the 1920s, IBM’s high-tech punch card machines were revolution-
izing how large organizations kept records. Starting in 1926, IBM soared
1,992% in 168 weeks.
Brunswick: Bowling was extremely popular in the 1950s, and Brunswick
came out with a game-changing product: Automatic pin-spotters for
bowling alleys. Earnings soared and the stock shot up 1,500% in 162
weeks.
Home Depot: The new “big-box store” would forever change the hardware
and do-it-yourself industries. In 1982, the stock bolted 892% in 64 weeks.
AOL: In the early 1990s, cyberspace was the realm of tech-savvy geeks.
Then AOL created a fun and easy way for everyone to go online. Starting
in 1994, the stock rose 570% in just 75 weeks.
Crocs: In 2006, what caused this shoemaker’s stock to soar 431% in only 59
weeks? The unmistakable “Crocs craze” created by its unique—and
seemingly ubiquitous—new line of casual footwear made of a proprietary
resin.

And that doesn’t even mention major moves by Google, Apple, Priceline,
Netflix, Baidu, F5 Networks, Intuitive Surgical, cloud computing leaders
Rackspace Hosting and SolarWinds, or 3D printing innovators 3D Systems
and Stratasys, just to name a few.