Louis Navellier's "Little Book That Makes You Rich" offers a disciplined growth strategy built around eight fundamental rules, including rising earnings estimates, positive earnings surprises, accelerating sales, expanding margins, and strong cash flow. TAL EDUCATION GROUP- ADR (NYSE:TAL) is a Beijing-based smart learning solutions provider whose recent fundamentals align with many of those conditions, making it a relevant name for investors following this methodology.
A strong fit with the core earnings criteria
The strategy places heavy weight on evidence that analysts are becoming more optimistic and that companies are delivering more than expected. TAL has been a standout on both fronts:
- EPS estimate revision for the next quarter (3 months): +165.12%
- Positive EPS surprises in the last 4 reports: 4 out of 4
- Average EPS estimate beat over the last 4 quarters: +148.24%
These are not simply one-off beats. Four consecutive positive surprises suggest the company has consistently outperformed expectations, which is exactly the kind of pattern that can drive upward estimate revisions and subsequent price appreciation under Navellier's framework.
Growth and margin momentum
The methodology also looks for companies that combine revenue growth with expanding profitability. TAL's recent numbers show that combination clearly:
- Revenue growth (TTM vs. prior TTM): +32.40%
- Sales growth (latest quarter vs. year-ago quarter): +31.89%
- Operating margin growth over the past year: +956.33% (from a low base)
- EPS growth (latest quarter vs. year-ago quarter): +971.43%
- EPS growth (TTM): +550.00%
- Free cash flow growth (TTM): +71.22%
The operating margin expansion is particularly relevant to the Little Book strategy because it indicates that revenue growth is translating into improved profitability, not just higher sales volume.
High return on equity and financial health
Navellier also rewards companies that generate strong returns on shareholder capital. TAL has a return on equity of 22.24%, a level that places it among the better performers in the Diversified Consumer Services industry.
The broader fundamental report assigns TAL a rating of 6 out of 10. It highlights excellent financial health, strong growth, and an undemanding valuation, while noting some minor concerns on profitability. The company has no debt, which supports its ability to reinvest in growth. For a full breakdown of the underlying metrics, investors can check this fundamental analysis report.
Why these criteria matter for the strategy
Each of these screens is designed to identify companies that are not only growing but also improving in quality. Positive estimate revisions and earnings surprises can be early signals that the market has yet to fully price in better results. Strong sales growth, margin expansion, and free cash flow generation give the company the internal resources to fund that growth. A high return on equity suggests management is using capital efficiently.
The main risk for a stock with this profile is that growth rates will eventually normalize. TAL's recent EPS growth has been exceptional, and a slowdown from these levels could make the stock look less compelling under the strategy. Investors should therefore monitor whether these fundamental trends persist.
Given the current backdrop of a neutral long-term S&P 500 trend and a positive short-term trend, growth-oriented screens remain relevant, but individual stock selection still matters. Investors who want to apply this methodology more broadly can find additional stocks matching these criteria in this Little Book screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »
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High Growth and Improving Fundamentals Drive TAL Education Group (NYSE:TAL)
Louis Navellier's "Little Book That Makes You Rich" offers a disciplined growth strategy built around eight fundamental rules, including rising earnings estimates, positive earnings surprises, accelerating sales, expanding margins, and strong cash flow. TAL EDUCATION GROUP- ADR (NYSE:TAL) is a Beijing-based smart learning solutions provider whose recent fundamentals align with many of those conditions, making it a relevant name for investors following this methodology.
A strong fit with the core earnings criteria
The strategy places heavy weight on evidence that analysts are becoming more optimistic and that companies are delivering more than expected. TAL has been a standout on both fronts:
These are not simply one-off beats. Four consecutive positive surprises suggest the company has consistently outperformed expectations, which is exactly the kind of pattern that can drive upward estimate revisions and subsequent price appreciation under Navellier's framework.
Growth and margin momentum
The methodology also looks for companies that combine revenue growth with expanding profitability. TAL's recent numbers show that combination clearly:
The operating margin expansion is particularly relevant to the Little Book strategy because it indicates that revenue growth is translating into improved profitability, not just higher sales volume.
High return on equity and financial health
Navellier also rewards companies that generate strong returns on shareholder capital. TAL has a return on equity of 22.24%, a level that places it among the better performers in the Diversified Consumer Services industry.
The broader fundamental report assigns TAL a rating of 6 out of 10. It highlights excellent financial health, strong growth, and an undemanding valuation, while noting some minor concerns on profitability. The company has no debt, which supports its ability to reinvest in growth. For a full breakdown of the underlying metrics, investors can check this fundamental analysis report.
Why these criteria matter for the strategy
Each of these screens is designed to identify companies that are not only growing but also improving in quality. Positive estimate revisions and earnings surprises can be early signals that the market has yet to fully price in better results. Strong sales growth, margin expansion, and free cash flow generation give the company the internal resources to fund that growth. A high return on equity suggests management is using capital efficiently.
The main risk for a stock with this profile is that growth rates will eventually normalize. TAL's recent EPS growth has been exceptional, and a slowdown from these levels could make the stock look less compelling under the strategy. Investors should therefore monitor whether these fundamental trends persist.
Given the current backdrop of a neutral long-term S&P 500 trend and a positive short-term trend, growth-oriented screens remain relevant, but individual stock selection still matters. Investors who want to apply this methodology more broadly can find additional stocks matching these criteria in this Little Book screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »