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How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition, 4th Edition by William O'Neil

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CHAPTER 4A = Annual Earnings Increases: Look for Big Growth

Any company can report a good earnings quarter every once in a while. And as we’ve seen, strong current quarterly earnings are critical to picking most of the market’s biggest winners. But they’re not enough.

To make sure the latest results aren’t just a flash in the pan, and the company you’re looking at is of high quality, you must insist on more proof. The way to do that is by reviewing the company’s annual earnings growth rate.

Look for annual earnings per share that have increased in each of the last three years. You normally don’t want the second year’s earnings to be down, even if the results in the following year rebound to the highest level yet. It’s the combination of strong ...

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