When it comes to building wealth in the stock market, there are various ways and methods. You may already have tried different methods, but it seems that you are in a dead end. However, it is definitely possible to generate millions when trading stocks.
There are different types of investors, and everyone has its preferred investment option. For instance, income investors prize dividends the most, and value investors prefer buying stocks which trade under their initial value. Alternatively, growth investors focus on buying companies which have the best upside potential and aim to de-emphasize regular valuation metrics that commonly display a growth stock to be more expensive than the current earnings of the company. So, buying the proper firms during their early phase can generate huge fortunes for growth investors.
Growth investing can be great for generating high returns, but first of all, it is essential to understand what growth stocks are and if, given your specific circumstances, they are adequate investments. You can also use service like Motley Fool’s stock advisor to find these stocks. Day Trade Review provided an in-depth review of the premium stock picking service.
There is no miracle solution or method to guarantee returns with growth investing, especially when the company doesn’t meet the expectations. Yet, if you want to increase your chances of success further, you should definitely look for the following traits in your next potential company (or companies):
1. An Expanding Market Opportunity
For decades, the biggest growth stocks have increased their top line at a two-digit rate. Blue chip companies with the highest revenue on the market further increase their income by attacking enormous market opportunities.
There are various examples of successful growth businesses that are pursuing huge market opportunities. For instance, Tesla’s venture into the automotive industry and Amazon.com’s aim to disrupt the world from retail. Each one of these companies generates trillions of revenues in annual sales around the globe, which in return will further increase their success chances for future growth.
Besides, a key point of a company’s success is expanding its addressable market opportunity throughout the years. It can be achieved by implementing different services or products in new business segments as it has grown. Tesla and Amazon.com adopted this strategy, as well. Tesla was mainly founded to manufacture automotive products, but it has expanded its market opportunities throughout the years, and now it sells energy storage systems. As for Amazon.com, it began as a web retailer but now has a prosperous web services business.
“Optionality” is the company’s ability to enter nearby businesses, and it is a crucial factor that every growth investor should take into account when considering a potential growth investment.
2. Durable Competitive Advantage
One of the investment tenants of Warren Buffet is to purchase businesses with a strong competitive advantage, which he calls it the “moat” of a company. A company simply can preserve its competitive advantage over its competitors for an extended period, thereby protecting its profits from capitalism’s forces.
Also, there are four main types of competitive advantage:
- Intangible Assets: They are physical and measurable assets which are used in the operations of the company. These assets can be trade secrets, patents, and regulatory protection. Tiffany’s & Co is a great example. This company uses its brand name to convince the customers to pay more on its premium jewelry.
- High switching costs: If the switch to a competing product is expensive, customers tend to remain loyal to their current company even when there is a rise in the price. A great example of high switching costs is consumer banking.
- Low-cost producer: If a business enjoys scale, technological, or geographic advantage in which it can produce good product or service for a lower cost than its rivals, it can charge a lower price and still generate high revenues. Walmart is an excellent example of a low-cost producer; it has an efficient supply chain and enormous buying power to sell services and products with a much lower charge than its rivals.
- Network effect: If a new customer joins a network, an additional value is added for all the other members of the same network. For instance, the rise of social media can be linked to the network effect directly. The more users post media or links on a social media site, the more there is users’ appeal, and the more useful the platform is for the public.
When looking for your next big growth stocks, make sure to look for at least one of these competitive advantages. It will undoubtedly increase your chances of success and will yield great results and revenues.
3. Financial Resilience
When it comes to the economy, every company will face ups and downs throughout the years. Even blue chips can face hard times. That is why it is always better to favor growth companies that can fund the needs of their future growth with internally generated revenues rather than depending on functional financial markets.
Alternatively, it is recommended to avoid growth companies that are depending on a continuous stream of acquisitions or operating at a loss. When a company is operating at a loss, it will continuously have to tap shareholders for new capital to keep the doors open, which will certainly lead to high dilution level that will ultimately mute future revenues. The same situation goes for no-growth or slow business as well, which depend on acquisitions to post growth. The purchase of other companies directly can be expensive and often require the buyer to issue new shares or take debts to help with funding the deals.
These companies eventually rely on a factor beyond their control (a high stock price or functional capital markets) which may stop their growth if the economy sputters.
Pandora Media is an excellent example. Even though it has a fine brand name and has remarkably expanded its profits for many years, hundreds of millions of dollars are consistently lost annually. That’s what led the company to dilute shareholders with the offerings of secondary stock and tap the debt markets for new capital.
4. Business Model of Repeat Purchase
Attracting new customers to a company is difficult and costly. That’s why selling services or products to existing customers is far better for a business to make money instead of relying on a never-ending stream of new customers to increase its growth.
That’s why companies like Fitbit and GoPro were once top growth companies and now turned into losing investments. They both sell long-lasting electronic devices that negate the need to make a second purchase by the existing customers. As a result, these companies are in a constant need to drive more new customers to generate year-over-year growth. It was certainly possible before when they were small, but it is now getting more challenging with the expanding number of competitors and the saturation of the initial market niche.
Alternatively, an exceptional example of the repeat purchase business model is Starbucks. People don’t just jump from one coffee shop to another. If they like a place or a brand, they stick with it for life. Knowing that Starbucks already has a huge fanbase and a growing following, it’s easy to see why existing customers won’t be replacing it any time soon.
5. Strong Appreciation of Past Price
You should look for companies which have strong earnings growth during at least the past ten years. Besides, the minimum EPS growth depends on the company’s size. For instance, you may look for a growth of 5% or more for businesses that are larger than $4 billion, 7% or more for companies in $400 million-$4 billion, and 12% or more for the ones under $400 million.
The fundamental idea is that winning corportaions are likely to keep on winning. So, you should start looking for companies that have already beaten the stock market.
6. Excellent Business Culture
Due to the fierce competition between the different companies of the same industry, every business is regularly looking for highly talented employees to secure its valuable position on the stock market and satisfy the needs of its customers. This business culture is very crucial and a key factor for every company’s success.
You can look for a review of a company’s employees with a simple search on the internet. Having a look at the different reviews will provide you with a better understanding of any company’s culture.
7. Talented Leadership
The final, yet the most important principle you should look for in a company is a dedicated and talented CEO who is sincerely committed to the mission of the company and is highly motivated to turn the business into a success.
You should look for potential leaders in the different business that will not only provide a better future for the company but also increase your chance of generating high revenue with growth investing.
There are various leaders (whether they are founders or co-founders) who succeeded in turning a small business into a blue chip — for instance, Jeff Bezos at Amazon.com, Mark Zuckerberg at Facebook, and Reed Hastings at Netflix.
Furthermore, you can look for any potential leader on the internet, and you can have a better understanding about his/her current status in a particular company, education, work experiences, and major achievements. Also, look for videos where he/she gives does a presentation about the company’s service and product.
Additionally, check the company’s inside ownership rate to know if they own a lot of stock personally and aren’t working to earn a pay package.
Does the leadership team have a significant role in the company? Or are they selling the growth stock as soon it vests? You can find the answers in the SEC filings (look for recent Form 4s and DEF-14A).
Final Thoughts on Growth Investing
A successful strategy for growth investing is a long-term play. Make sure to follow the different principles listed above and opt for companies with products or services that you genuinely believe in and be ready to hold them through the up and down cycles of the market.
TILBURY could soon be home to the world’s largest biomass plant after its power station got permission to start vital works.reports the UK’s Thurrock Gazette.
The RWE N Power station, off Fort Road, is currently coal-fired, but plans to run entirely on wood pellet biomass fuel by the end of the year.
The plant could have a generating capacity of about 750MW, in comparison to 265MW at Alholmens Kraft Power Station in Finland, currently the world’s largest biomass power station.
On Monday, Thurrock Thames Gateway Development Corporation approved the installation of two vacuum ship unloaders on the station’s jetty, the relocation of the old ship unloaders for coal, plans for the extension and enclosure of an existing conveyer junction tower, and a new dust separator and conveyors, all essential for the switch to biomass.
A spokesman for the power station said: “We are delighted we now have the necessary consents in place to develop the option of converting our existing power station.
“Work to convert all three of the station’s units to generate power from sustainably sourced renewable wood pellets until the closure of the power station, by the end of 2015, is now likely to start in the summer.
“The converted plant is expected to be fully operational towards the end of 2011.”
Biomass is considered a much cleaner fuel, substantially reducing the creation of ash.
The power station already uses some biomass fuel in place of coal – under European regulations, the coal-fired station must close by 2015.
The spokesman said the firm is looking at a “range of options” for the power station after this.
Pipes are to be laid to bring low carbon heat, produced on the Olympic site, to homes and businesses in Stratford High Street.
The London Development Agency and London Thames Gateway Development Corporation are to provide £480,000 to Cofely, the energy services company of GDF Suez, to install hot water pipework connecting the energy centres on the Olympic Park and Stratford City through to Stratford High Street and beyond. This will mean that in future developers can tap into the low carbon heat source provided by the two energy centres rather than building their own combined heat and power plants.
The Mayor of London, Boris Johnson said:
“It is vitally important that the Olympic and Paralympic Games helps to raise standards of sustainability and this is a shining example of the green legacy of the 2012 Games. With the news of the Royal Docks becoming an Enterprise Zone, this area of East London is set to become a crucible of low carbon innovation. These pipelines buried deep underground, will in the future feed clean, green energy direct from the Olympic park into Stratford’s homes and businesses.”
London Development Agency Director of Projects Martin Powell said:
“District heating networks are a simple and effective technology that captures surplus heat and delivers it to homes and buildings to provide their heating and hot water requirements. This investment will mean Stratford’s future growth can benefit from low carbon heat.”
Peter Andrews LTGDC Chief Executive said:
“With this significant infrastructure investment we are connecting sustainable development into the very fabric of east London. Our funds will facilitate the further expansion of the network towards Stratford, Bromley by Bow and Sugar House Lane and has the potential to link up and deliver heat throughout the Thames Gateway. In sustainable infrastructure – as much as with clean technology – east London is both primed and leading the way.”
The Mayor has a target to generate 25% of London’s energy locally by 2025. The Mayor recently kicked off works on a future £80 million gasification plant in Dagenham transforming household rubbish into clean energy to power up to 15,000 local homes.
Cofely’s Energy Centre on the Olympic Park is the largest energy centre scheme to be built so far in the UK. The Energy Centre is providing efficient low-carbon heating and cooling across the site for the Games and for the new buildings and communities that will develop after 2012 through a district heating network.
London Thames Gateway Development Corporation has given developer Ballymore the thumbs up to build 1,700 homes on a former factory site next to Canning Town station.
The 12-acre Leamouth Peninsular site opposite the Greenwich O2 Centre will be built in stages with new homes and offices contained in 13 buildings ranging from three to 27 storeys in height.
Irish property developer Ballymore was badly hit by the Irish economic crisis, but chairman Sean Mulryan said he was confident financial pressures would not threaten the Leamouth project.
He said: “Now that we have got the green light, we will be cracking on immediately and expect to be marketing this site in the autumn.”
The site was formerly occupied by the Pura Foods oil processing plant, which relocated to a new facility in Essex in 2005. The previous buildings have now been demolished and the site cleared.
Tower Hamlets Council previously rejected the developer’s plans because of concerns over inaccessibilty and financing.
Ballymore will now build a new footbridge linking the peninsula with Canning Town station.
Phase one, at the southern end of the site, will include 537 homes, 54,000 sq ft of offices, an art gallery, shops and community facilities, and 275 parking spaces.
Phase two will include up to 1,169 homes, 25,000 sq ft of business space, more shops, and a school.
Completion of the project is expected to take five years.
The former chair of the London Thames Gateway Development Corporation has been appointed the chair of government-owned property company London & Continental Railways.
Lorraine Baldry’s appointment as chair of LCR, which owns a range of property interests along the route of High Speed 1, will be for a term of three years.
Baldry is chair of consultancy Inventa Partners, chair of Tri-Air Developments, a board member of the Olympic Delivery Authority, a governer of the University of the Arts London, a senior independent director at DTZ Holdings and a former chair of the LTGDC.
Baldry said: “With its land interests including King’s Cross Central and the International Quarter Stratford City, and track record in regeneration linked with High Speed 1, LCR is already one of the UK’s most exciting property companies.
“I am thrilled to become chairman as LCR enters a new phase of its life.”
From Havering in the East to Hillingdon in the West, from the North’s Barnett and Enfield boroughs, to the Southern boroughs of Sutton, Croydon and Bromley, and those in between – Merton, Greenwich, Ealing, Hounslow, Waltham Forest, Bexley, to name but a few, the vast conurbation of Greater London covers a lot of territory.
Some of it borders the more central boroughs, gradually shifting from inner to outer to greater London, but it is a varied mix of urban, old industrial and leafy suburb that presents a challenging mix of housing and regeneration issues. However, the East dominates the regeneration landscape, figuratively and quite literally, as this former industrial powerhouse is transformed.
For obvious reasons, the Olympics dominate attention and for those boroughs at the heart of this redevelopment it is a chance of a lifetime. Certainly, the borough of Newham intends to use the Games to the full.
“Newham is at the heart of London’s future,” declares the council’s Economic Development Strategy, published in October last year. “More jobs are likely to be created in the borough over the next two decades than anywhere else in London. Investment in Newham’s Arc of Opportunity from the Olympic Park and Stratford Metropolitan Centre in the North to the Royal Docks in the South will create a new part of London, and transform the borough’s economy and the life chances of its residents… The 2012 Olympic and Paralympic Games are the catalysts for this transformation.”
There’s nothing quite like optimism, especially in this day and age of austerity and ‘social downsizing’ of the public sector in terms of funding and jobs, with its knock-on effects for the wider economy, but in seeking to use the Olympics to its own advantage, Newham – not to mention the other boroughs in the Games’ zone – must also navigate the most challenging aspect of all: to avoid becoming steamrollered by the huge international juggernaut that is the Olympic Games. Legacies, we have been assured since day one, are all part and parcel of the process – the host boroughs shall not be left behind – however, that is apparently not all as cut and dried as smooth assurances suggest.
What follows the Games in terms of a positive legacy remains unclear, as a recent National Audit Office (NAO) report indicated. For all the promise, there is the risk that the region may find itself host to a number of white elephants once the pomp, ceremony and sporting action is over.
Despite the progress made, the NAO highlighted that “while the Government Olympic Executive is accountable for the success of the legacy and has set out the four strands of its work, it has not yet estimated the net benefits it expects to accrue to the UK which can be directly attributed to the G ames”.
Amyas Morse, the NAO’s head, added: “The final cost of the Games to the taxpayer is inherently uncertain and as the Games near there will be less flexibility to make savings in response to any unforeseen financial pressure.”
This isn’t exactly music to the ears of London’s Council Tax payers (freeze or no freeze) who will be picking up some of the tab for the Games for years to come, still less for those living and working in the Games’ development epicentre. In the wake of the NAO ’s report, it’s not so much a case of Bow Bells ringing for a new generation of Eastenders, but for the elected Mayor of Newham, Sir Robin Wales a case of alarm bells.
“If this Government fails to plan for a meaningful legacy then the Games will be nothing but a vanity parade – and that would be a disaster given the amount of public money already ploughed into staging the Olympics,” said Sir Robin.
“The [Olympic Park Legacy Company (OPLC)] has been doing great work but it is evident from the report that the Government Olympic Executive now needs to get a grip on just how important the legacy is for East Londoners. W hile the report reminds us of the key promises, there’s no acknowledgement of the fact that the host boroughs were on the receiving end of some of the largest cuts to local authorities in the country.
“Along with the other host boroughs, we’re at the forefront of delivering a legacy for our residents in terms of jobs, housing and health benefits from increased sports activity. However, Newham, Hackney and Tower Hamlets all received the maximum cut imposed by the Department for Communities & Local Government. This endangers our ability to contribute to providing legacy for our residents. Combined with the Government’s lack of legacy planning and the fact that the Games are [so near] alarm bells should be ringing.”
Yet the prize is surely a worthy one, if the promise can be made into somekind of reality. The Eastern swathes of London’s vast urban sprawl are considered to have considerable potential to drive forward the UK ’s economic growth – providing regeneration is carried through successfully.
In December last year, a study by Oxford Economics suggested a fully regenerated East London could contribute a staggering £21 billion a year to London’s economic wealth. The East already accounts for around 15 per cent of the capital’s Gross Value Added (GVA), the organisation said.
London has consistently outperformed the national average since 1990 in terms of economic performance and job creation. In this timeframe, it has created 940,000 jobs, with East London steadily taking on a rising share. Indeed, according to Oxford Economics, between 2000-2008, it was accounting for a quarter of all the new jobs created. Looking ahead, the organisation claims the region has the potential to create an extra 180,000 jobs over the next 25 years.
Peter Andrews, chief executive of the London Thames Gateway Development Corporation (LTGDC) said: “Nowhere in London is there such an extraordinary package of development or the scale of both opportunity and land to accommodate significant growth. For London to remain a competitive world-class city it’s going to be reliant on East London for a significant proportion of its jobs and housing growth.”
If Newham is at the epicentre of the Olympic regeneration, Barking & Dagenham lies at the heart of the Thames Gateway. This is a huge and longstanding programme of regeneration and urban renewal that is said to be the largest regeneration area in Europe, while the Barking Riverside development, which effectively creates a new town out of the ruins of bygone industrial land, is said to be the single biggest brownfield redevelopment in the UK.
Not as glamorous as the Olympics projects, perhaps, but the Thames Gateway schemes inevitably overlap with the Games programme since they share some of their turf, such as the Lower Lea Valley, where the Olympic Park construction is underway.
The full extent of the Thames Gateway stretches some 40 miles along the Thames estuary, from London’s Docklands to Southend in Essex and Sheerness in Kent. The overall scheme is vast, and the vision aims for over 160,000 new homes, the revitalisation of existing town centres and transport links, parklands, and commercial buildings to create a major extension of the capital. For Barking & Dagenham, it represents the biggest transformation of the borough since industrialisation swept it up into the urban embrace.
Though Greater London’s ‘centre of gravity’ may have been pulled Eastwards by the scale of the Olympics and the gargantuan Thames Gateway regeneration, not every Eastern borough stands to gain quite so much from these major-league regeneration schemes, nor is the Eastern flanks of the conurbation the be-all-andend- all of Greater London. W hat about the rest of the city’s outlying boroughs?
Well, last month the Mayor of London Boris Johnson announced the £50 million Outer London Fund intended to specifically help with the revitalisation of town centres in the boroughs that won’t directly benefit from the 2012 Games.
“This fund is a vital shot in the arm for our town centres and just the help needed to get new projects off the ground that wouldn’t otherwise happen,” said London Mayor Boris Johnson. “I am delighted that after months of hard negotiations we have secured a significant pot of money to help projects really motor and we now have the means to nurture developments, increase work and leisure opportunities and make futures bright.
“It is vital we address the historic neglect of the outer boroughs that preceded this mayoralty and this is one of the ways we can start delivering growth. What we know through the work we have already done with the Outer London Commission is that one of the greatest economic assets provided by the outer boroughs is the quality of life afforded to residents.
“We are talking about the places people call home – the communities they care about, the commercial centres where they shop, where their kids play, where they meet friends or spend time with their families. These places are the very beating heart of communities and also offer great economic wealth that needs to be fully tapped into.”
Set against the billions pumped in to the Lower Lea Valley or the Thames Gateway region, that 50 million quid for the outlying boroughs might seem like small change, but it is a question of scale, of course, and the money was welcomed by those speaking on the boroughs’ behalf.
“Outer London offers not only a tremendous quality of life, but has major interests and businesses of its own,” said Councillor Teresa O ’Neill, leader of Bexley Council, and an advisor to the Outer London Commission. “Its success is vital to the economy of London and to the nation as a whole. This money will make a significant difference in making sure that outer London plays a full part in the capital’s continued success.”
The welcome for the funding extends Westwards too, with Merton’s Assembly Member Richard Tracey, who said: “I’m delighted that Boris is continuing to invest in outer London town centres and making sure that all Londoners benefit from his Mayoralty. The regeneration of local centres is vital to maintaining and improving the quality of life of people who live and work in Merton. Outer London provides two fifths of all the jobs in the capital, so it is very important that it is supported so that new opportunities can be created for local people.”
With its good transport links and location next to Canary Wharf, this part of the Isle of Dogs has been identified as a “growth area” for new homes and jobs. To manage this growth the Council is preparing a Masterplan to help shape future development in the area and provide appropriate facilities for the local community, alongside new housing and employment space. The Masterplan will become a Supplementary Planning Document (SPD) to the Tower Hamlets Core Strategy 2025.
It’s never been more exciting to live in Tower Hamlets, with London 2012 taking place next summer, the growth in the City and Canary Wharf, and the Thames Gateway Development, putting Tower Hamlets firmly at the heart of London’s future growth and success. It is important to take advantage of these opportunities, managing growth and change within the borough, improving areas in a way that meets the current and future needs of Tower Hamlets communities. In order to achieve this it is essential that residents are involved in shaping these plans for change.
We want to talk to local people to find out their priorities for this area. To do this we will be holding public exhibitions at different locations in and around the Masterplan area in May 2011. Council officers will be available at the exhibitions to discuss the options for the Masterplan, record your views and comments and to answer any questions about the Masterplan. Details of these events are below:
Asda Supermarket, Isle of Dogs Store
Saturday 14 May, 10am-1pm
Canary Wharf, Jubilee Place
Monday 16 May, 12pm-7pm
Jack Dash House (Tower Hamlets Council offices), Marsh Wall
Wednesday 18 May, 12pm-6pm
There will also be an evening workshop at Jack Dash House on Thursday 19 May from 6:30 – 8:30pm to discuss some of the key issues for the Masterplan in more detail. If you are interested in joining the workshop, please email firstname.lastname@example.org or telephone 020 7364 5327 by Friday 13 May to leave your contact details.
easyJet will initially operate flights to Barcelona adding other destinations such as Madrid, Milan, Amsterdam, Berlin, Glasgow, Edinburgh and Belfast later in the year. Complementing Stansted, which already offers an unrivalled range of European destinations, these new services are further enhancing Essex’s fantastic transport links.
Southend is a great destination for the business traveller, located outside the largely congested sprawl of London means that the business traveller can save 20 minutes on a journey to or from Europe. A new airport railway station is complete enabling passengers to get from the plane to the train in 15 minutes.
Airport Managing Director Alastair Welch said:
“We’ve designed the airport specifically for short-haul travel, with 10 aircraft stands, there won’t be long distances to travel through the terminal.”
Catherine Lynn, easyJet’s Customer and Revenue Director said:
“We are excited to be opening London Southend. The airport is in a fantastic location just outside London with a fast rail link into the city.”
Southend will be the closest large airport to Stratford, the site of the 2012 Olympics offering up to eight train services an hour and direct links to the Olympic Park, in 44 minutes and to London Liverpool Street, in the heart of London’s financial district, 6 minutes later.
London Southend Airport has been on a regeneration drive since the Stobart Group bought the site in 2008. As well as the new £12m airport railway station and a new control tower, there are also plans for a £10 million 129-bedroom hotel at the airport to open in 2012.
The reach and convenience of this new Essex transport hub helps make the global market place more accessible to local businesses.
As well as a number of strong and established sectors, Essex is poised to benefit from significant growth in the offshore wind energy sector.
With a national target to deliver some 40GW of offshore wind energy by 2020, Essex is at the centre of the world’s largest market for offshore wind deployment and the UK’s most dense area of offshore wind energy development.
The value of the offshore wind sector is set to grow from an estimated £130 million in 2008/9 to £138 billion in 2020 presenting Essex companies with a unique opportunity.
Essex is well poised to contribute to and benefit from this growth industry. The proximity of the UK’s east coast deep-sea ports and planned offshore wind farms, a well established manufacturing and ports and logistics, and access to a wide skills base provide great opportunities for Essex to attract investment in this sector. Essex companies can play a significant role in the supply of goods and services within the sector and take advantage of this considerable economic opportunity for the expanding wind supply chain.
Opportunities in Essex
Harwich International Port is already heavily involved. It was used for the installation of the Gunfleet Sands wind farm and is currently being used as the installation port for Greater Gabbard – currently the world’s largest offshore wind farm under construction. In addition, Harwich is the installation port for the first round of turbines for London Array I.
Expansion at Bathside Bay (adjacent to Harwich International Port) would offer additional land, which would build on the experience the port already has to offer.
London Gateway, on the Thames Estuary has both land and quay space that could support manufacturing. Significantly the precision engineering, aviation and the automotive sector based around Basildon are likely to be key complementary sectors that could contribute directly to the offshore energy supply chain.
Both Chelmsford and Colchester have an expanding skill-base, supported by a strong financial services sector in Brentwood; engineering strengths across Braintree; offshore marine skills in Maldon, and growing R&D cluster around Harlow all of which will bring substantial value to the wind energy sector in terms of manufacturing expertise, innovative product development and highly skilled workforce.