Growth Gems

Buys shares in companies that grow fast and get everything else right at the same time. Ten checks decide: revenue grows by more than 15 percent a year over three years, more than 10 percent is expected for the coming year, the share count grows by less than 3 percent a year, and revenue growth plus cash-flow margin add up to at least 40. On top of that: a gross margin of at least 40 percent that is not eroding, goodwill from acquisitions that does not grow faster than revenue, debt below twice operating profit, cash flow that covers the profits of the last three years, a return on capital of at least 15 percent or rising, and insiders who hold or keep buying. Only companies passing at least 8 of the 10 checks make the portfolio. Only shares our own deep-dive analysis rates green are bought — yellow or no analysis at all is not enough. New positions are added once a month; a share is sold as soon as it drops off the list or is no longer rated green.

This portfolio buys shares.