I’m writing this post to help me find and identify stocks to invest/trade in.
I found this table of the different stages of a company:
Peter Lynch classifies stocks into 6 groups:
1. Fast growers. 25%+ earnings growth.
2. Medium growers (stalwarts). Steady 10-12% earnings growth.
3. Slow growers (sluggards). No or very little growth but they often pay generous dividends.
4. Cyclicals. Sales and profits fall and rise in regular but not completely predictable fashion. These do well when economies come out of a recession and begin to expand.
5. Turnarounds. Stocks that go through deep troubles and their survival may come into question. If they manage to fix their issues they can have big rebounds that are the lest correlated to the overall market.
6. Asset plays. Hidden assets.
I want to operate in stages 5-8 on the table and mainly in the fast growers among the Lynch definitions. But I can’t rule out operating in turnarounds and cyclicals occasionally.