Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market: How to Achieve Superperformance in Stocks in Any Market

by Mark Minervini

Institutional favorites are also referred to as quality companies or official growth stocks, but don’t let those titles impress you too much. These are mature companies, and they’re certainly no secret. They generally have a good track record of consistent sales and dividend growth, and they often attract conservative institutional capital because of their proven history of management’s ability to increase earnings, expand margins, and create shareholder value. Their earnings growth is generally in the low to middle teens. These companies are regarded as the ones that most likely won’t go out of business. Often they are referred to as blue chips or stalwarts. Examples include Coca-Cola, Johnson & Johnson, and General Electric, to name a few. Although all that sounds good, there’s one problem: they’re usually big and sluggish by the time they reach institutional favorite status. Although their earnings are deemed to be consistent and of high quality, usually the growth is slow, and the companies are so widely followed that there’s little room for rapid price appreciation.