Four growth stocks that may have caught Philip Fisher's eye

Monday, Nov 05 2012 by
6
Four growth stocks that may have caught Philip Fishers eye

When Philip Fisher wrote Common Stocks and Uncommon Profits in 1958, he documented a now famous approach to growth investing. His focus on robust management and strong company growth prospects has proved to be a lucrative blend. It has also proved an inspiration to his peers, including Warren Buffett. Fisher’s legacy is a powerful approach that continues to produce strong stockmarket returns. So far in 2012 Stockopedia’s interpretation of his strategy has been among the best performing growth investing screens, with a 24.8% return versus 9.4% for the FTSE 100. According to AAII, stocks passing their interpretation of the Fisher screen tracked between January 1998 and August 2008, produced an astonishing cumulative return of 133.5%, versus 32.2% for the S&P 500. 

Recently we took a closer look at how Fisher’s approach to growth investing works. At its heart is a 15-point list of demanding buy criteria that mixes quantitative and qualitative analysis with a focus on exploring each stock’s potential to grow. In his book, Fisher insisted that the best time to sell a stock that had met these criteria was “almost never” provided the investor’s assessment of the company was accurate. 

Management integrity & growth characteristics 

Fisher's whole approach is based on the idea of “scuttlebutt”, or looking beyond simple financial statements to pull together all sorts of information about a stock in order to get a detailed view of it. The points he looked for can be split up into two categories: 

1. Management Qualities - He looked for depth, integrity, transparency, a long-term outlook, good staff relations and excellent financial controls. 

2. Business Characteristics - He looked for business characteristics that would support sustainable growth, namely a strong sales function, products or services with sufficient market potential, a commitment to ongoing product development through R&D and outstanding competitive positioning.  

He was also most comfortable when investing in large manufacturing companies that had a scientific element to them. 

Spirit of Fisher 

As with any quant screen approach, Stockopedia’s version of the Fisher screen inevitably has a numerical bias, focusing on key growth and quality ratios like sales growth, high margins and a compelling price/earnings growth rate (PEG). There are currently 22 stocks on the screen from a broad range of sectors. 

However, Fisher was not simply a ‘paint by numbers’…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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The Weir Group PLC is engaged in engineering businesses. The Company operates in three business segments: Minerals, Oil & Gas and Power & Industrial. The Company's Minerals segment is engaged in the provision of slurry handling equipment and associated aftermarket support for abrasive high wear applications used in the mining and oil sands markets. Its Oil & Gas segment is engaged in designing, manufacturing and supporting products used in the upstream pressure pumping, upstream pressure control and downstream refining operations. It provides products and service solutions to upstream, production, transportation, refining and related industries. Its Power & Industrial segment designs and manufactures valves, pumps and turbines, as well as providing specialist support services to the power generation, industrial and oil and gas sectors. Its brands include Warman, GEHO, Linatex, Vulco, Cavex, Enduron, Trio, SPM, Seaboard, Mathena, Hopkinsons, Atwood & Morrill, and others. more »

Share Price (Full)
821p
Change
2.7%
Mkt Cap (£m)
1,711
P/E (fwd)
11.1
Yield (fwd)
5.8

BTG plc is a specialist healthcare company. The Company operates in three business segments: Interventional Medicine (IM) (oncology, vascular and pulmonology products), Specialty Pharmaceuticals (antidote products) and Licensing (royalties from licensed assets). The Company's Interventional Medicine segment offers a portfolio of interventional medicine products that are designed to advance the treatment of liver tumors, advanced emphysema, severe blood clots and varicose veins. The Company's Specialty Pharmaceuticals segment offers a portfolio of antidote products that alleviate toxicity and treat rare conditions. The Company's Licensing segment receives royalties relating to the sales of products that are subject to intellectual property and license agreements between the Company and various partners. The Company's subsidiaries include BTG International (Holdings) Ltd, Provensis Ltd, BTG International Ltd and BTG Employee Share Schemes Ltd, among others. more »

Share Price (Full)
579p
Change
2.4%
Mkt Cap (£m)
2,166
P/E (fwd)
24.4
Yield (fwd)
n/a

Petrofac Limited is an international service provider to the oil and gas production and processing industry, with a diverse client portfolio, including various integrated, independent and national oil and gas companies. The Company operates in four segments: Onshore Engineering & Construction, which delivers onshore engineering, procurement and construction (EPC) to onshore oil and gas projects; Offshore Projects & Operations, which includes its Offshore Capital Projects service line, specializes in both offshore engineering and construction services, for greenfield and brownfield projects, and the provision of operations and maintenance support, onshore and offshore; Engineering & Consulting Services, which provides engineering services across the life cycle of oil and gas assets, and Integrated Energy Services, which provides an integrated service for hydrocarbon resource holders under commercial models that are aligned with their requirements. more »

Share Price (Full)
711.5p
Change
1.3%
Mkt Cap (£m)
2,395
P/E (fwd)
7.8
Yield (fwd)
6.3



  Is Weir fundamentally strong or weak? Find out More »


2 Comments on this Article show/hide all

StrollingMolby 6th Nov '12 1 of 2
1

Interesting to note that Weir (LON:WEIR) is the most shorted UK share (by aggregate disclosable positions) in today's FSA's short selling spreadsheet, at 9.06% of shares in issue. What are the hedgies seeing that the Fisher screen is not?

http://boards.fool.co.uk/short-positions-first-fsa-list-12677587.aspx

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Ben Hobson 8th Nov '12 2 of 2

Decent interim results from BTG - highest riser in the FTSE 250 today, up 7.57%

Investment Research: Stockopedia
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About Ben Hobson

Ben Hobson

Strategies Editor at Stockopedia. Writer, Editor & Investment Strategies Analysis. Test driving and telling the world about the awesome stock market investing tools and resources at Stockopedia. Helping Stockopedia subscribers take control, invest with confidence, beat the market and sleep soundly at night. more »

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