How to find sustainable growth stocks

Six growth checks

Look for consistency and the economic drivers behind reported growth.

1. Revenue growth across several years rather than a single spike.
2. Operating margin and whether scale improves profitability.
3. EPS growth after any share issuance or dilution.
4. ROE with attention to debt and a small equity base.
5. Operating cash flow to corroborate reported profit.
6. Market opportunity, repeat customers and competitive advantages.

Screen and compare

Start with positive revenue growth, then examine operating margin, ROE and valuation. Compare companies at similar stages and read their disclosures for sources of growth.

Risks

Growth can slow, funding needs can dilute shareholders, and a high valuation makes a stock sensitive to missed expectations. Check multiple scenarios rather than extending past growth mechanically.