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The Zulu Principle: Making extraordinary profits from ordinary shares by Jim Slater

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10. Weighting The Criteria

I will restate the criteria for selecting small dynamic growth shares before we assess their relative importance:

  1. A positive growth rate in earnings per share in at least four of the last five years.
  2. A low price earnings ratio relative to the growth rate.
  3. An optimistic chairman’s statement.
  4. Strong liquidity, low borrowings and high cash flow.
  5. A substantial competitive advantage.
  6. Something new.
  7. A small market capitalisation.
  8. High relative strength of the shares.
  9. A more than nominal dividend yield.
  10. A reasonable asset position.
  11. Management should have a significant shareholding.

The first criterion is very important: the five year record provides the back-cloth against which next year’s growth ...

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