Value Investing in Growth Companies: How to Spot High Growth Businesses and Generate 40% to 400% Investment Returns

Foreword xi     Preface xiii     Rusmin Ang   s Journey xiv     Victor Chng   s Journey xvi     How We Met xvii     Overview of the Contents xix     Acknowledgments xxi     Chapter 1 The Making of a Value-Growth Investor 1     The Common Journey of New Investors 1     Short-Term Trading to Long-Term Investing 2     Growth Investors 4     Value Investors 6     Value Investors versus Growth Investors 7     Value-Growth Investors 9     Warren Buffett   s Journey 10     Value-Growth Investors 12     Definition of Growth Companies 13     Common Misconceptions about Growth Companies 14     Myth 1: The Higher the Growth Rate, the Better the Company 15     Myth 2: Fast Growers Are Companies in Fast-Growing Industries 16     Myth 3: You Cannot Buy Growth Companies at Bargain Prices 16     Myth 4: Fast Growers Are Companies That Have Small Market Capitalization 17     Myth 5: Small and Fast-Growing Companies Are Not Covered by Analysts and Institutions 18     Myth 6: Growth Companies Pay Very Little Dividend 18     Why Value-Growth Investing? 19     Capital Appreciation or Intrinsic Value Appreciation 20     Dividend Growth and Passive Incomes 23     Summary 26     Chapter 2 The Secrets of Successful Value-Growth Investors 29     Healthy Thoughts Lead to Sustainable Results 29     Mindset 1: Understand the Power of Compound Interest 29     Mindset 2: Start Young! 33     Mindset 3: Be a Long-Term Investor! 35     Mindset 4: Never Leverage to Invest in the Long Run! 36     Mindset 5: Exercise Independent Thinking 38     Mindset 6: Be Emotionally Stable 39     Mindset 7: Think Contrarian When Investing 41     Mindset 8: Understand Mr. Market (Effi cient Market Theory versus Mr. Market) 43     Summary 46     Chapter 3 The Jigzaw Puzzle   Four Pieces to Value-Growth Investing 47     The Jigsaw Puzzle Model 47     The Art and Science of Investing 49     Looking for the Right Information 53     Information Released by the Company 53     Information from Outsiders 57     Summary 58     Chapter 4 Business   The First Piece of the Puzzle 61     Understand a Company   s Business Model 61     Simple Business 63     Circle of Competence 65     Going Beyond the Limit 67     Competitive Advantage 70     Knowing the Competitors 73     Think Like a Customer through the Scuttle-Butting Process 74     Finding Future Growth Drivers 76     Understanding Risks   What Can Go Wrong? 78     Summary 79     Chapter 5 Management   The Second Piece of the Puzzle 81     Management Forms the Cornerstone of a Business 81     Criterion 1: Trustworthiness 83     Criterion 2: Candid in Reporting 86     Criterion 3: Aligned with Shareholders    Interests 88     Criterion 4: Track Record/Experience 90     Criterion 5: Visionary Managers 92     Summary 96     Chapter 6 Numbers   The Third Piece of the Puzzle 97     Numbers Do Not Lie 97     Numbers to Look at When Reading the Income Statement 98     Revenue 98     Cost of Goods Sold 100     Gross Profit 100     Expenses 102     Net Profit 103     Earnings per Share (EPS) 106     Numbers to Look at When Reading the Balance Sheet 109     Noncurrent Assets 110     Current Assets 112     Noncurrent Liabilities 114     Current Liabilities 115     Shareholders    Equity 116     Current Ratio 117     Return on Equity 118     Debt-to-Equity Ratio 120     Numbers to Look at When Reading the Cash-Flow Statement 122     Cash Flow from Operations 123     Cash Flow from Investment 124     Cash Flow from Finance 127     Summary 129     Chapter 7 Valuation   The Fourth Piece of the Puzzle 131     The Valuation of a Stock 131     Price-to-Earnings Ratio 133     Types of PE Ratio 136     Price-to-Earnings-to-Growth Ratio 137     Discounted Earnings Model 141     Intrinsic Value 141     Margin of Safety 148     Undervalued 149     Fair Value 149     Overvalued 150     Summary 154     Chapter 8 Screening   Buy   Monitor   Sell 155     Screening (Using Numbers against Competitors) 155     Stage 1: Consistency in Key Performance Indicators 156     Stage 2: Comparing the Compound Annual Growth Rate 157     Stage 3: Finding Consistency or Increases In Margins 158     Stage 4: Digging Further into a Company   s Debt and Cash Position 159     Stage 5: Digging Further into Other Numbers to Confi rm Your Pick 159     Conclusion 161     Buy, Monitor, and Sell 162     Buy, Buy, and Buy 163     Monitor, Monitor, and Monitor 166     Online Monitoring 169     Offl ine Process 170     Sell, Sell, and Sell 171     Summary 177     Chapter 9 Portfolio Management for Growth Companies 179     Understanding Your Portfolio 179     Types of Diversifi cation 180     Personal Diversifi cation 181     Company Diversifi cation 182     Industry Diversifi cation 183     The Sky Is the Limit 184     Summary 185     Chapter 10 Avoid Common Mistakes 187     The Dos and Don   ts of Investing 187     Mistake 1: You Think You Are a Long-Term Investor but You Are Really a Speculator 187     Mistake 2: Timing the Market 189     Mistake 3: Investing in High-Technology and IPO Companies 190     Mistake 4: Investing in Companies that Are Not Consistent 192     Mistake 5: Buying a Growth Trap (Not Focusing on the Quantitative Side) 194     Mistake 6: Buying a Value Trap (Not Focusing on the Qualitative Side) 195     Mistake 7: Sell Your Winners
 Keep Your Losers 198     Mistake 8: Diversification Mistakes 199     Summary 200     Chapter 11 Case Studies and Conclusion 201     Bibliography 205     About the Authors 207     Index 209