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How to Find Big Cap Growth Stocks

The market, ignoring problems here and abroad, is on a tear and showing no signs of slowing. If you want to participate; in-favor, large-cap growth stocks are your best bet.

With that in mind, here’s a screen for finding profitable large-caps that are in favor with stock analysts and the smart money players.

Free Stock Screener

I’ll show you how to find them using the free and user friendly FINVIZ stock screener, although you could probably do the same thing using your broker’s stock screener. If you’re unfamiliar with the term, a stock screener is a program that you can use to search the entire market for stocks meeting your particular requirements.

From the FINVIZ home page (finviz.com), start by selecting screener, and then select “All” on the Filters menu so that you can see the 65 selection filters that FINVIZ offers to search out stocks meeting your requirements. From there, use the associated dropdown menus to select values for the filters that you want to use.

Set Up the Search

Start by selecting “Large” for Market Cap and “USA” for Country which limits our list to U.S.-based firms with $10 billion or higher market capitalizations (value of all outstanding shares).

Market Sentiment

Pinpoint “in favor” stocks first by selecting “Buy or Better” for Analyst Recommendations. Then, use the Institutional Ownership filter, which measures the percentage of outstanding shares held by mutual funds, banks, and other big players. Anything over 40 percent represents support by the smart money, but in this instance, select “over 70 percent” to insure maximum enthusiasm. Finally, in the enthusiasm department, select “over 25 percent” for Next Five Years (average annual) EPS Growth to limit the list to stocks with strong growth expectations.

Fundamentals

Enthusiasm is great, but high debt loads can trip up these high flyers. So, we’ll use the Debt/Equity filter to avoid that risk. Debt/Equity compares total debt to shareholders equity (book value). A zero D/E ratio signals no debt and the higher the ratio, the higher the debt. Most firms carry some debt, so we shouldn’t be too extreme here. Select “Under 0.4” for D/E.

Along those same lines, firms can report positive earnings, but still be losing money when you count the cash. You can avoid such firms by requiring positive cash flow. FINVIZ doesn’t offer a cash flow filter, but you can assure that passing stocks are generating positive cash flow by specifying “Over 5” for Price/Free Cash Flow. That number could only be positive when cash flow is positive.

The List

My screen listed four stocks: Adobe Systems (ADBE), Facebook (FB), Palo Alto Networks (PANW), and Salesforec.com (CRM). Click here to see what the screen turns up today.

Consider the output of any screen, including this one, as research candidates, not a buy list. The more you know about your stocks, the better your results.

8/7/17

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