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Value Investing in Growth Companies: How To Spot High Growth Businesses and Generate 40% to 400% Investment Returns by Rusmin Ang, Victor Chng

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Chapter 8

Screening—Buy—Monitor—Sell

Screening (Using Numbers against Competitors)

To get you started on finding growth companies, you can begin by looking at the financial numbers (we will get back to the qualitative side of our analysis once a company passes this screening stage). As you should understand by now, financial numbers are one of the most important sources of information when it comes to value investing. In this case, these numbers are capable of telling us a story of a company, indicate its financial performance, or even the strength of moats used by the business. They also serve as an indicator as to how sustainable a business is. Therefore, when screening growth companies, you can start by looking at the right financial numbers. To help you do this, we are going to show the step-by-step process used to screen these numbers, all for the purpose of comparing a company with its competitors.

To start this screening process, for example, we will choose an easy-to-understand industry, such as the food and beverage (F&B) industry. We will start by comparing four companies in this industry to keep things simple. They are listed in the Singapore Exchange (SGX): BreadTalk Group Limited, ABR Holdings Limited, Sakae Holding Limited, and Tung Lok Restaurant Limited.

Here, this screening process will be broken down into five stages. Companies that pass Stage 1 of the screening process will proceed to Stage 2, and so on. If a company does not pass Stage 1, it will be eliminated. ...

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