From Ken Little,
Your Guide to Stocks.
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For many stock investors, the key word they want to hear is growth and, specifically, growth in earnings.

If a company’s earnings aren’t growing, the company isn’t 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 don’t make good investments unless there is a chance they’ll be bought.

Earnings Growth

No, what most investors want is solid, consistent earnings growth.

Young companies may not have that to offer right away and that’s 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 Growth

At 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.

There’s no guarantee a stock will continue with a consistent performance, however you shouldn’t 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.

That’s a habit you don’t want the company to break.