10. Weighting The Criteria
I will restate the criteria for selecting small dynamic growth shares before we assess their relative importance:
- A positive growth rate in earnings per share in at least four of the last five years.
- A low price earnings ratio relative to the growth rate.
- An optimistic chairman’s statement.
- Strong liquidity, low borrowings and high cash flow.
- A substantial competitive advantage.
- Something new.
- A small market capitalisation.
- High relative strength of the shares.
- A more than nominal dividend yield.
- A reasonable asset position.
- Management should have a significant shareholding.
The first criterion is very important: the five year record provides the back-cloth against which next year’s growth ...