If a companys earnings arent growing, the company isnt going to survive for very long unless it has a huge reserve and can live off its fat.
These companies are consuming themselves and certainly dont make good investments unless there is a chance theyll be bought.
Earnings GrowthNo, what most investors want is solid, consistent earnings growth.
Young companies may not have that to offer right away and thats one of the reasons they are considered more risky than established firms are.
Companies that sit on piles of cash may not be doing their investors any favors. Cash is an asset to be managed like other assets.
When evaluating a company and growth is your goal, look for companies with a history of growing earnings through all sorts of stock market and economic conditions.
Five Years of Earnings GrowthAt least five years of consistent results should give you confidence that the stock has ridden through different market and economic scenarios.
You can find that information on most quote sites, including Reuters.com.
Theres no guarantee a stock will continue with a consistent performance, however you shouldnt stop with just this number.
Look at the other financial ratios and other information about the business.
If everything else looks good, go with a company that is in the habit of posting a growth in earnings.
Thats a habit you dont want the company to break.