Monday, August 20, 2007

Picking Great Growth Stocks

As readers of my blog know, I favor higher quality dividend paying stocks. However, there are strong companies with strong cash rich balance sheets that warrant investment consideration. Ken Kobrick, formally of Wellington Management and State Street Research & Management, highlights four factors an investor needs to evaluate in selecting growth stocks. He terms these factors BSAM:
  • Business Model: How the company plans to grow, be profitable and protect itself from competitors.
  • Assumptions: The key assumptions the company makes about their markets upon which they then develop the business model.
  • Strategy: This is simply the plan the company develops to implement the business model.
  • Management: These are the actual people who create the great business models, assumptions, execution and all the rest. Great management is also needed, over time, to adjust business models for competitive situations.
At the end of this post is a link to the longer article comparing eBay to Google.

The Secrets of Picking Great Growth Stocks
AAII Commentary
By: Fred Kobrick

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