Dusseldorf We are looking for shares in companies whose profits are growing faster than average year after year. As a result, these stocks are growing into their high valuations faster than others. This makes the growth strategy less risky than it might appear at first glance.
The criterion for the evaluation is the price-earnings ratio (P/E). It puts the stock price in relation to the net profit. This strategy isn’t about finding stocks with the lowest P/E ratios possible. Because these are often companies from overripe sectors such as tobacco, which impress with high dividends – but whose profits are only growing little or not at all.
Only companies whose profits have grown at an above-average rate in recent years and for which analysts are forecasting sharply increasing profits for the current year and the years to come made it into the following selection. This is most likely to be achieved by companies from technology-related sectors.
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