- Insurers rank well but are inherently risky.
- Aim the place for UK growth stocks.
Two of the consistent flaws in our growth at a reasonable price (GARP) screen methodology has been its tendency to flag cycle businesses at the end of a good run; and stocks where earnings recovery stories are already in the price. Ironing out these deficiencies completely is difficult, but it is possible to try new safeguards while remembering the most important one: screens are only ever the first step in analysing shares.
With this in mind, we’ve added a couple of new constraints, aimed at identifying businesses enjoying genuine growth. These are focused on the top line: we now stipulate large or mid-cap companies must be forecast to see revenue growth of at least 5 per cent a year and the blend of the forecast and the recent growth rate is also above 5 per cent.
