Large Cap Growth

Goal/Rationale of the Screen

The goal of this screen is to find top growth stocks in the large cap universe. It does this by searching the large cap stocks with growth rates in the top 20% of their industry. Scanning for large cap growth stocks is similar to scanning for mid cap growth stocks. And the stocks that pass have all reached a level of excellence in terms of their growth rate. Also similarly, this screen adds in valuation components to make sure these large cap movers are still attractive enough to get in.

Criteria

Strategy

Large cap stocks with top performing growth rates can sometimes be harder to find, often because of their size. For example, a small cap company with $100 million in sales that comes up with an idea that'll generate an additional $100 million in sales just doubled their growth. Take that same $100 million idea and apply it to a $1 billion company and that's now a 10% growth rate. Take that to a $10 billion company and they've just increased sales by 1%. But many large cap companies got to be large cap companies by having great ideas and excellent execution. And there are still plenty of those companies out there continuing on that path of success. This screen seeks to find those companies by only selecting the large cap growers in the top 20% of their respective industry. But in spite of this being a growth screen, it does not sacrifice value to get there. The valuations are accommodative enough to allow for increased growth but they provide plenty of room to get in at a good price. The beauty of finding a large cap growth stock is that it can easily turn into a core holding. And finding top tier growth rates that are normally reserved for smaller companies along with the added benefit of potentially less risk and volatility that a larger name can provide, it can help you generate those big returns but with a smoother ride in getting there.

Things to Watch Out For

When looking at growth rates, don't just look at earnings growth, pay attention to sales too. A large company may have extra excesses that they can wring out. This of course is great news and the stock should benefit, especially if it improves their margins. But without meaningful sales growth, once the costs have been cut, there's no more 'growth' to fuel the move. But if all of the above is being done while also seeing strong sales growth, those are the true winners. Because when you come right down to it, sales are the lifeblood of any company. Without sales there wouldn't even be a company to talk about.

Summary

Large cap growth stocks can be just as exciting as any small cap growth stock - and maybe even more so if you prefer your growth without the wild volatility that newer stocks and smaller names will often carry with it. Add in some smart valuation metrics and you've got the makings of a dynamic list of potential powerhouses that won't keep you up at night.