This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Jensen, Auer Find Growth Amid Rubble

With corporate earnings collapsing these days, some growth funds are modifying their approaches.

Instead of straining to find stocks with rapid earnings gains, portfolio managers are settling for companies that are reporting little or no growth. But not all growth funds have shifted. Some managers are sticking to their rigid disciplines, combing through the stock universe to find the limited number of companies that are still reporting rich profits.

Consider Bob Auer, the consistent manager of Auer Growth (AUERX). Year after year, Auer only takes stocks that grow at an annual rate of at least 25% and sell for a price-to-earnings ratio of not more than 12. "We want to pay less and get more," Auer says.

The growth fund currently holds 202 stocks that have passed his screens. In recent years, Auer has owned as many as 250 stocks. The total slipped to 150 in 2002, a recession year.

To find stocks, Auer considers 9,000 candidates, ranging from tiny companies with market capitalizations of less than $10 million to the giants of the S&P 500. Computers could do the work, but most programs are not as current as the news columns of The Wall Street Journal and Investor's Business Daily. So Auer relies on the newspapers and a pair of scissors.

Every day he flips through the papers looking for quarterly earnings reports. Once he finds a candidate, Auer cuts out the article. Besides examining the earnings growth and P/E ratio, he also reviews the balance sheet to make sure the business is not about to go bankrupt. As a final check, he examines statements by the company. If the chief executive forecasts that earnings will fall, Auer stays away.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CTSH $62.79 0.49%
FLS $62.00 -0.21%
AAPL $129.64 0.92%
FB $79.62 0.82%
GOOG $561.54 0.56%

Markets

DOW 18,244.46 +111.76 0.62%
S&P 500 2,112.89 +8.39 0.40%
NASDAQ 4,997.7750 +34.2480 0.69%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs