In addition to Value and Momentum, Atlas Capital includes Growth in our ranking of equity indices in countries and sectors. In the long run, increases in stock prices are primarily driven by increases in earnings, so there is a good reason to include Growth in the rankings of markets. Over the last 25 years, countries and sectors ranked in the top half on Growth have had annual returns more than 2.5% per year higher than those in the bottom half.
Elements considered in the Growth assessment include:
- Real (inflation-adjusted) growth in dividends, earnings, operating income, and sales
- Trend in operating margin and in return on equity
- Realized earnings per share vs. what was forecasted one year earlier
