MILLBURN, N.J. (Stockpickr) -- The other day a good friend -- whom I refer to in my writings on The Street.com as "Craig the Jeweler" -- and I were discussing the difference between stocks and commodities. My opinion is that stocks have earnings, accumulate assets and pay dividends, whereas commodities have either industrial applications or social value. Craig asked me why companies stocks such as Wal-Mart (WMT) and Home Depot (HD - Get Report) perform poorly? After all, he hypothesized, they are all making good money. I told him it's all about growth.Investors tend to seek one or more of the following: value, growth and income. Growth is the furtherance of a company's sales and net worth. Income represents the dividends that the company pays shareholders. Valuation looks at the worth of a company vs. its market price. One of the classic models of stock valuation is the discounted cash flow model, or DCF, a growth-based model that considers the present value of a company's future earnings. Another model, the dividend discount model, or DDM, values companies based on dividends per share divided by the discount rate less the dividend growth rate. My peers consider me to be GARP -- or growth at a reasonable price -- type of investor. That does not mean that I shun stocks with dividends, and I have many clients at LakeView Asset Management who also see out income. But my ultimate focus is on growth. Related: 5 Stocks Setting Up to Break Out To recognize when a company is growing -- or, conversely, when its growth slows down -- there are two important traits to be on the lookout for. I'll go over both below, as well as a few established companies with growth potential -- and a few without. Geographic Expansion Typically a company starts off as a single store or factory. Wal-Mart started off as a general merchandise store in Bentonville, Ark. Semiconductor manufacturer Intel ( INTC) started out with just one plant. As the company seeks out new markets, it will begin to spread out from its initial location across the country. It may do this by either expanding into nearby cities and states or strategically selecting locations for expansion.
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