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.

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