Investors who focus on these fast-growing companies increase their chances of success. To measure growth, analysts calculate the percentage change in a company's earnings per share in the latest quarter with that of the same quarter a year earlier. This is a fairer way to compare growth than, say, looking at numbers in the current quarter vs. the previous quarter. Consider retailers, whose business is highly seasonal. They tend to see earnings in the quarter ending in January surge from the previous period as holiday sales fatten their bottom lines.
Every additional share issued dilutes the ownership of existing stockholders.
Be wary of companies whose financial reports focus only on sales and net income. They may have trouble sustaining growth on a per-share basis. Those companies that can sustain such high growth rates over time often see the biggest increases in stock prices. Keep a close eye on companies with growth in the most recent quarter that rises at a faster rate than the previous quarter. If this acceleration continues over several quarters, it may indicate the company is leading the charge in a hot industry.