Non-Financial Metrics To Look Out For In A Company As A Growth Investor

In order for you to know whether a potential growth stock is good or not, there are a number of things to bear in mind – and it doesn’t have to be about numbers obtained from historical information or as a result of one form of analysis or the other.

Finding the best stocks to invest in can be a difficult task. For the investor interested solely in making short term income, the strategies involved are vast and they are just there for the purpose of finding loopholes to score fast gains.

However, the growth investor is going to be investing both time and money. The person is going to need to have an idea of what to expect from the investment and he or she must also be able to have a certain degree of trust or hope in the future of the company.

In order for you to know whether a potential growth stock is good or not, there are a number of things to bear in mind – and it doesn’t have to be about numbers obtained from historical information or as a result of one form of analysis or the other.

Below are some of the non-financial metrics to look out for in a company as a growth investor:

A Tried and Tested Business Model

One of the advantages of investing in a company that has been on for years is that it has an established pattern. It isn’t struggling to figure out what works or whether its clients or customers would like its style or not.

As such, on thing you should be on the lookout for is whether a company has a good business model or not. Does the company have multiple lines of revenue that protects it from financial gaps all period long?

Does it have a reputable list of clients or customers that have been retained over the years? And would it still be valid and relevant in the years to come? Key updates or news about a company’s operations can provide the information required to determine this.

Strong competitive advantage and Goodwill

A business that isn’t aware of its competition would soon be left alone. Competitive rivalry, especially when healthy, can propel companies to take on new opportunities and be innovative generally.

A company that exists in its own space would ultimately crash if it isn’t wary of the tactics other companies are employing to shift it from its position. Is the company competitively advantaged or disadvantaged?

Does it have prospects that would give it its required market share or is it hanging on to past glory? How is its Goodwill? Does it have a strong brand name? Is it known to be of good standing or one that is questionable? How do the customers of the company perceive the company?

Would they be able to stay loyal in face of competing alternatives? What are the advantages that can be exploited? A company that is wary of the competition would be able to shield its investors by keeping its profits protected from the forces of capitalism.

Sound management/ corporate culture

No matter how willing the investors are, without good leadership, all the investments would be a complete waste. What is the reputation of the leaders of the company? Are the managers of the company experienced?

Do they seem to have the passion required for the business to soar to new heights? In terms of its corporate culture, does it have a good sustainability measures in place to ensure that the dreams of the business would not die or end with the current leadership?

What is the business culture like? Reading reviews of the company and a little extra probing would save you from a ticking time bomb as the employees would typically know more about the company than you would.

These measures help protect your interest as an investor. They would, often times, reveal more than the company’s financial statement would. Peeking into deeper issues would save you from potential losses.

Written by Lawretta Egba.