Page 1067 - How to Make Money in Stocks Trilogy

Buying Checklist 53

What did they all have in common as they made their big moves? Big
earnings growth driven by a hot new product or industry trend.
Not every stock you buy will be one of these big winners, but a new crop
of innovators does emerge in every new bull market cycle. They’re the true
market leaders that have the potential to go up 100%, 300%, 500%, or more.
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And since they share the same CAN SLIM traits, you’ll find them high-
lighted in features like the IBD 50, Sector Leaders, and Your Weekly
Review.
Think what catching just one or two of these stocks in the next big
uptrend could do for your portfolio.
Let’s see how you can make that happen using the Buying Checklist.

Buying Checklist

Big Rock #2: Focus on companies with big earnings growth and a new, innovative
product or service.
❏ Composite Rating of 90 or higher
❏ EPS Rating of 80 or higher
❏ EPS growth 25% or higher in recent quarters
❏ Accelerating earnings growth
❏ Average Annual EPS growth 25% or more over last 3 years
❏ Sales growth 25% or higher in most recent quarter
❏ Return on equity (ROE) of 17% or higher
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❏ SMR Rating (Sales + Margins + Return on Equity) of A or B
❏ New products, service, or management
❏ Among the top-rated stocks in its industry group
❏ Ranked in top 40–50 of IBD’s 197 industry groups