Set a Minimum Level for Current Earnings Increases

As a general guide for new or experienced investors, I would suggest you not buy any stock that doesn't show earnings per share up at hast 18% or 20% in the most recent quarter versus the same quarter the year before. Many successful money-makers use 25% or 30% äs their minimum earnings parameter. And make sure you calculate the percentage change; don't guess or assume. You will be even safer if you insist the last two quarters each show a significant percentage increase in earnings from year-ago quarters.

During bull markets, I prefer to concentrate in equities (comrnon Stocks) that show powerful current earnings leaping 40% or 50% up to 500%. Why not buy the very best merchandise available? If you want to further sharpen your stock selection process, before you buy, look ahead to the next quarter or two and check the earnings that were reported for those same quarters the previous year. See if the Company will be coming up against unusually large or small earnings achieved a year ago.


In some instances, where the unusual year-earlier earnings are not due to seasonal factors (the December quarter is always big for retailers, for example), this procedure may help you anticipate a strong or poor earnings report due ahead in the coming months. Many individuals and institutions alike buy Stocks with earnings down in the most recently reported quarter just because they like a Company and think the stock's price is cheap. Usually they accept a story that earnings will rebound strongly in the near future. While this may be true in some cases (it frequently isn't), the main point is that at any time in the market, you have the choice of investing in at least 5000 or more Stocks. You don't have to accept promises of something that may never occur when alternative investments are actually showing current earnings advancing strongly.