Louis Navellier’s classic growth investing approach, outlined in The Little Book That Makes You Rich, relies on eight fundamental criteria designed to identify companies with accelerating earnings, expanding margins, and strong operational momentum. The strategy seeks stocks that not only grow but consistently exceed expectations, generate cash, and demonstrate improving efficiency. By filtering for positive earnings revisions, consistent earnings surprises, rising revenue and earnings growth, expanding margins, strong free cash flow, accelerating earnings momentum, and high return on equity, the method aims to pinpoint companies with durable competitive advantages. One stock that currently satisfies these demanding conditions is Sanmina Corp (NASDAQ:SANM).
Business Profile
Sanmina is a provider of integrated manufacturing solutions, components, and after-market services for original equipment manufacturers across industrial, medical, defense, automotive, communications, and cloud infrastructure end markets. Its operations are divided into Integrated Manufacturing Solutions (IMS) and Components, Products and Services (CPS), giving it broad exposure to secular trends in electronics production and supply chain difficulty.
How Sanmina Meets the Eight Growth Criteria
The screening parameters derived from Navellier’s rules produce a clear fundamental picture for SANM, with most values well above the minimum thresholds.
- Positive Earnings Revisions: The screen requires at least a 4% upward revision in the next-quarter EPS estimate over three months. SANM shows a revision of 8.99%, indicating analysts are raising their expectations meaningfully.
- Positive Earnings Surprises: At least three positive surprises in the last four reports is the bar, and the average beat must exceed 10%. SANM has beaten estimates in all four of the last quarters, with an average surprise of 12.23%, comfortably clearing both hurdles. Such consistent outperformance tends to force analyst models higher, feeding further price momentum.
- Increasing Sales Growth: The screen calls for at least 20% year-over-year (Y2Y) revenue growth and 20% quarter-over-quarter (Q2Q) growth. Sanmina’s TTM revenue growth stands at 44.48%, while its most recent quarterly sales growth hit 102.27%, vastly exceeding both requirements. Strong top-line growth is the foundation of a growth thesis.
- Expanding Operating Margin: The condition demands at least a 2% improvement in operating margin over the past year. SANM delivered a 7.93% improvement, signaling that it is scaling profitably.
- Strong Cash Flow: Free cash flow growth of at least 15% is required. Sanmina’s free cash flow growth is a notable 313.62%, reflecting a dramatic increase in cash generation that funds organic investment and balance sheet flexibility.
- Earnings Growth: The screen looks for at least 15% Y2Y and Q2Q EPS growth. SANM’s TTM EPS growth is 58.05%, and its most recent quarterly EPS growth is 124.11%, far surpassing the baseline.
- Positive Earnings Momentum: This requires the most recent Q2Q EPS growth rate to exceed the rate from the same quarter one year prior. Sanmina’s current Q2Q EPS growth of 124.11% compares to just 8.46% four quarters ago, a clear acceleration that fits the momentum criterion exactly.
- High Return on Equity: A minimum ROE of 10% is needed. SANM’s ROE is 10.73%, meeting the threshold and outperforming over 72% of its industry peers.
Fundamental Assessment Summary
A closer look at the fundamental analysis report reveals a balanced but growth-heavy profile. Sanmina earns a fundamental rating of 5 out of 10, with a standout growth score of 8 out of 10. Past and future earnings growth are both rated positively, with expected EPS growth of 27.49% annually and expected revenue growth of 26.72% annually. Notably, both EPS and revenue growth rates are accelerating, which aligns with the strategy’s focus on momentum.
Profitability is adequate, scoring 6 out of 10, supported by improving operating margins and a decent return on invested capital. Financial health scores a lower 4 out of 10, reflecting some concerns around liquidity ratios and a debt-to-equity ratio that is high relative to peers. However, the debt-to-FCF ratio of 2.96 suggests manageable leverage given the strong cash flow.
Valuation scores 6 out of 10, with the stock trading at a P/E of 25.10—slightly cheaper than the S&P 500 average of 26.61 and significantly cheaper than its industry average of 45.23. The forward P/E of 16.57 further supports the view that growth is not yet fully priced in. The low PEG ratio reinforces the idea that the current price is reasonable relative to expected earnings expansion.
Additional Screening Results
This analysis of Sanmina is part of a broader set of candidates identified by the Navellier-inspired screen. For investors interested in reviewing all stocks currently passing these eight conditions, further details are available through the dedicated screener. The screener can also be customized to adjust thresholds for tighter or looser criteria.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance and screening criteria are not guarantees of future results. Always conduct your own research before making investment decisions.
Read full article here »
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Sanmina Corp (NASDAQ:SANM) Passes Navellier's Eight Growth Criteria as a High Growth Stock
Louis Navellier’s classic growth investing approach, outlined in The Little Book That Makes You Rich, relies on eight fundamental criteria designed to identify companies with accelerating earnings, expanding margins, and strong operational momentum. The strategy seeks stocks that not only grow but consistently exceed expectations, generate cash, and demonstrate improving efficiency. By filtering for positive earnings revisions, consistent earnings surprises, rising revenue and earnings growth, expanding margins, strong free cash flow, accelerating earnings momentum, and high return on equity, the method aims to pinpoint companies with durable competitive advantages. One stock that currently satisfies these demanding conditions is Sanmina Corp (NASDAQ:SANM).
Business Profile
Sanmina is a provider of integrated manufacturing solutions, components, and after-market services for original equipment manufacturers across industrial, medical, defense, automotive, communications, and cloud infrastructure end markets. Its operations are divided into Integrated Manufacturing Solutions (IMS) and Components, Products and Services (CPS), giving it broad exposure to secular trends in electronics production and supply chain difficulty.
How Sanmina Meets the Eight Growth Criteria
The screening parameters derived from Navellier’s rules produce a clear fundamental picture for SANM, with most values well above the minimum thresholds.
Fundamental Assessment Summary
A closer look at the fundamental analysis report reveals a balanced but growth-heavy profile. Sanmina earns a fundamental rating of 5 out of 10, with a standout growth score of 8 out of 10. Past and future earnings growth are both rated positively, with expected EPS growth of 27.49% annually and expected revenue growth of 26.72% annually. Notably, both EPS and revenue growth rates are accelerating, which aligns with the strategy’s focus on momentum.
Profitability is adequate, scoring 6 out of 10, supported by improving operating margins and a decent return on invested capital. Financial health scores a lower 4 out of 10, reflecting some concerns around liquidity ratios and a debt-to-equity ratio that is high relative to peers. However, the debt-to-FCF ratio of 2.96 suggests manageable leverage given the strong cash flow.
Valuation scores 6 out of 10, with the stock trading at a P/E of 25.10—slightly cheaper than the S&P 500 average of 26.61 and significantly cheaper than its industry average of 45.23. The forward P/E of 16.57 further supports the view that growth is not yet fully priced in. The low PEG ratio reinforces the idea that the current price is reasonable relative to expected earnings expansion.
Additional Screening Results
This analysis of Sanmina is part of a broader set of candidates identified by the Navellier-inspired screen. For investors interested in reviewing all stocks currently passing these eight conditions, further details are available through the dedicated screener. The screener can also be customized to adjust thresholds for tighter or looser criteria.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance and screening criteria are not guarantees of future results. Always conduct your own research before making investment decisions.
Read full article here »