The "Little Book That Makes You Rich," authored by growth investing pioneer Louis Navellier, outlines a disciplined, eight-rule framework for identifying high-quality growth stocks. The strategy focuses on companies demonstrating consistent earnings acceleration, upward analyst revisions, expanding margins, and strong cash flow generation. By screening for these specific fundamental characteristics, investors aim to capture stocks with durable momentum before the broader market fully prices in their potential. We ran this exact screen and identified Affirm Holdings Inc (NASDAQ:AFRM), a fintech company that checks nearly every box in Navellier’s playbook.
Meeting the Eight Rules
Navellier’s method relies on eight distinct, non-negotiable criteria. Below is how AFRM stacks up against each one, using the actual data points from our screen.
1. Positive Earnings Revisions
The strategy requires that analyst estimates for the next quarter have been raised recently. This signals that the professional consensus is turning more bullish. AFRM’s EPS estimate for the next quarter has been revised upward by 8.46% over the last three months, well above the 4% threshold used in the screen.
2. Positive Earnings Surprises
Companies that consistently beat expectations force analysts to raise their future forecasts. AFRM has delivered four positive EPS surprises in the last four reports, with an average beat of 71.78%. This far exceeds the screen’s minimum of three beats and a 10% average surprise, indicating strong operational execution.
3. Increasing Sales Growth
Growth stocks must demonstrate top-line expansion. AFRM posted 32.07% year-over-year revenue growth and 32.64% quarter-over-quarter revenue growth, both comfortably above the 20% minimums. This shows the company is not just growing, but accelerating its sales momentum.
4. Expanding Operating Margin
It is not enough to just sell more, profitability must improve. AFRM’s operating margin expanded by 196.16% over the past year, massively exceeding the required 2% improvement. This reflects strong cost discipline and economies of scale kicking in.
5. Strong Cash Flow
Free cash flow (FCF) provides the fuel for organic growth. AFRM’s FCF grew by 181.76% over the past year, crushing the 15% minimum. This level of cash generation gives the company significant strategic flexibility.
6. Earnings Growth
Bottom-line growth is the ultimate measure of a growth company. AFRM’s trailing twelve-month EPS grew by 623.81%, while its quarter-over-quarter EPS surged by 2,900%. Both figures are astronomically above the 15% thresholds, highlighting a dramatic inflection in profitability.
7. Positive Earnings Momentum
Navellier looks for accelerating earnings, not just growth. A custom expression in the screen compares the current quarter’s EPS growth to the same quarter one year ago. AFRM’s current Q2Q EPS growth of 2,900% dwarfs the prior year’s figure of 102.33%, confirming strong positive momentum.
8. High Return on Equity (ROE)
A high ROE indicates the company efficiently generates profits on shareholder capital. AFRM reports an ROE of 10.11%, just above the 10% minimum. While not excessive, it meets the bar and has room for further improvement as earnings scale.
Overall Fundamental Profile
Our full fundamental analysis report, available here, gives AFRM a composite score of 5 out of 10. This is a mixed picture, the company earns top marks for growth (score 8) and decent marks for profitability (score 4), but its valuation (score 3) and financial health (score 5) drag the overall rating down. The high price-to-earnings ratio of 74.14 reflects the premium the market places on its explosive growth. However, the low PEG ratio suggests that growth is actually cheap relative to future earnings expectations of over 100% annually. On the health side, a strong current ratio of 4.68 provides ample liquidity, though a debt-to-equity ratio of 2.35 and a negative Altman-Z score nuance warrant monitoring.
Analyst Views and Market Context
The broader market environment is currently supportive for growth stocks. The S&P 500’s long-term trend is neutral, but the short-term trend has turned positive, which often favors high-momentum names like AFRM. Analysts estimate EPS will grow by 102.22% on average over the next several years, accompanied by 24.31% annual revenue growth. When a company with this trajectory also meets stringent fundamental criteria, it often becomes a candidate for both position traders and longer-term growth investors.
Find More Opportunities
This screen is just one example of how Navellier’s eight rules can be automated. If you want to explore other stocks that pass this rigorous filter, you can access the full, up-to-date list of results by clicking the link below. The screen is configured to update as new data becomes available, ensuring you never miss a potential candidate.
View the full “Little Book That Makes You Rich” screener results
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance and screen results are not guarantees of future results. Always conduct your own due diligence and consider your financial situation before making any investment decisions.
Read full article here »
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Affirm Holdings Inc (NASDAQ:AFRM) Screens Positive in Navellier's Eight-Rule Growth Stock Framework
The "Little Book That Makes You Rich," authored by growth investing pioneer Louis Navellier, outlines a disciplined, eight-rule framework for identifying high-quality growth stocks. The strategy focuses on companies demonstrating consistent earnings acceleration, upward analyst revisions, expanding margins, and strong cash flow generation. By screening for these specific fundamental characteristics, investors aim to capture stocks with durable momentum before the broader market fully prices in their potential. We ran this exact screen and identified Affirm Holdings Inc (NASDAQ:AFRM), a fintech company that checks nearly every box in Navellier’s playbook.
Meeting the Eight Rules
Navellier’s method relies on eight distinct, non-negotiable criteria. Below is how AFRM stacks up against each one, using the actual data points from our screen.
1. Positive Earnings Revisions
The strategy requires that analyst estimates for the next quarter have been raised recently. This signals that the professional consensus is turning more bullish. AFRM’s EPS estimate for the next quarter has been revised upward by 8.46% over the last three months, well above the 4% threshold used in the screen.
2. Positive Earnings Surprises
Companies that consistently beat expectations force analysts to raise their future forecasts. AFRM has delivered four positive EPS surprises in the last four reports, with an average beat of 71.78%. This far exceeds the screen’s minimum of three beats and a 10% average surprise, indicating strong operational execution.
3. Increasing Sales Growth
Growth stocks must demonstrate top-line expansion. AFRM posted 32.07% year-over-year revenue growth and 32.64% quarter-over-quarter revenue growth, both comfortably above the 20% minimums. This shows the company is not just growing, but accelerating its sales momentum.
4. Expanding Operating Margin
It is not enough to just sell more, profitability must improve. AFRM’s operating margin expanded by 196.16% over the past year, massively exceeding the required 2% improvement. This reflects strong cost discipline and economies of scale kicking in.
5. Strong Cash Flow
Free cash flow (FCF) provides the fuel for organic growth. AFRM’s FCF grew by 181.76% over the past year, crushing the 15% minimum. This level of cash generation gives the company significant strategic flexibility.
6. Earnings Growth
Bottom-line growth is the ultimate measure of a growth company. AFRM’s trailing twelve-month EPS grew by 623.81%, while its quarter-over-quarter EPS surged by 2,900%. Both figures are astronomically above the 15% thresholds, highlighting a dramatic inflection in profitability.
7. Positive Earnings Momentum
Navellier looks for accelerating earnings, not just growth. A custom expression in the screen compares the current quarter’s EPS growth to the same quarter one year ago. AFRM’s current Q2Q EPS growth of 2,900% dwarfs the prior year’s figure of 102.33%, confirming strong positive momentum.
8. High Return on Equity (ROE)
A high ROE indicates the company efficiently generates profits on shareholder capital. AFRM reports an ROE of 10.11%, just above the 10% minimum. While not excessive, it meets the bar and has room for further improvement as earnings scale.
Overall Fundamental Profile
Our full fundamental analysis report, available here, gives AFRM a composite score of 5 out of 10. This is a mixed picture, the company earns top marks for growth (score 8) and decent marks for profitability (score 4), but its valuation (score 3) and financial health (score 5) drag the overall rating down. The high price-to-earnings ratio of 74.14 reflects the premium the market places on its explosive growth. However, the low PEG ratio suggests that growth is actually cheap relative to future earnings expectations of over 100% annually. On the health side, a strong current ratio of 4.68 provides ample liquidity, though a debt-to-equity ratio of 2.35 and a negative Altman-Z score nuance warrant monitoring.
Analyst Views and Market Context
The broader market environment is currently supportive for growth stocks. The S&P 500’s long-term trend is neutral, but the short-term trend has turned positive, which often favors high-momentum names like AFRM. Analysts estimate EPS will grow by 102.22% on average over the next several years, accompanied by 24.31% annual revenue growth. When a company with this trajectory also meets stringent fundamental criteria, it often becomes a candidate for both position traders and longer-term growth investors.
Find More Opportunities
This screen is just one example of how Navellier’s eight rules can be automated. If you want to explore other stocks that pass this rigorous filter, you can access the full, up-to-date list of results by clicking the link below. The screen is configured to update as new data becomes available, ensuring you never miss a potential candidate.
View the full “Little Book That Makes You Rich” screener results
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance and screen results are not guarantees of future results. Always conduct your own due diligence and consider your financial situation before making any investment decisions.
Read full article here »