America's Fastest Growing Companies.
"...Welcome to an Individual Investor tradition. Since 1991 the magazine has published a monthly section highlighting a selection of the fastest growing companies in America. It has proved to be one of the magazine's most popular features...The following companies are ranked according to the Individual Investor Power Rating...We measure 26 variables, grading stocks within four categories...A stock wins a perfect score of 5 if its valuation measures(e.g. PSR,...) are low; 5 for its liquidity (e.g. inventory turnover, debt loads...);another 5 for its operating efficiency(e.g. ROE, ROI, ROA...); and 10 for growth (both historical and projected)...Start with over 8,000 companies...exclude onetime gains and losses, earnings below $.05 a share in most recent quarter, and companies with dropping sales...earnings, more than book value, return on equity, or sales, are the strongest predictor of stock price movement...The hot product or clever marketing strategy that created explosive growth in one quarter often continues for several quarters in a row...Competition is tight. Only 250 of the possible 1,000 candidates reviewed each year clear the hurdle...the analyst team hand over the remaining 250 contenders to the light-speed circuitry and mathematical precision of a powerful in-house computer, prepped to put then through the most rigorous test of all, the II Power Rating System. The goal: to capture a company's entire financial health in a single number...Notice the lack of qualitative judgement...painting an objective portrait of a company's health...All that might sound like a lot of Wall Street mumbo jumbo, but it comes down to this: The three hurdles act like sieves, catching the gold while letting the sand sift through..."
As John pointed out TMSR came in at #2 in the entire universe of 8,000 candidates. Furthermore, the qualitative aspect may be just as important in this case e.g. top 100 places to work award, second to none entertainment hardware/software R&D team, marketing ability to have landed the TOP GUN, NASCAR licenses, Cereghino...)
source: Individual Investor Magazine, September 1997, pp. 51-72 iionline.com |
