Growth investing

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10. Do growth stocks have to be small?

Don't assume that growth stocks have to be small companies. A small capitalisation was one of the defining characteristics for Jim Slater in The Zulu Principle, but large companies can deliver too:

• Coca Cola stock quadrupled its price in the period 1988 to 1991.
• the share price of WPP, the UK-based advertising group, rose from 202p in October 1998 to 1,068p in February 2000 - an average annual growth rate of 103.8%.

So the phrase 'Elephants don't gallop' should perhaps be refined to 'Elephants don't often gallop'. Jeremy Utton, editor of Analyst, a leading publication for serious UK growth stock investors, makes a couple of interesting observations:

• big companies usually do well in big markets and small companies in small markets
• big companies rarely do well in small markets and small companies rarely do well in big markets

He says:

1. What is a growth stock? 2. Comparison with value investing 3. Traditional characteristics of a growth stock 4. Anatomy of a growth stock - Peter Lynch 5. Ten dos and don'ts from Peter Lynch 6. Jim Slater - The Zulu Principle 7. Earnings growth 8. The PEG factor 9. Competitive advantage 10. Do growth stocks have to be small? 11. A short diversion into internet stocks 12. When to sell a growth stock 13. Other factors 14. Case study of a growth stock - Sage 15. Conclusion

• Valuegrowth Investing - an Investor's Guide
• One Up On Wall Street