Show BABSON'S 1 t r er AUTHENTIC f STATEMENT w tv baba Special to TIlE THE EXPRESS BABSON DISCUSSES GROWTH STOCKS BABSON pARK MASS MASS- There are three prominent classes of stocks being talked about today 1 the old line Investment stocks included primarily the Jones Dow In- In Industrial Industrial Averages Average's thirty stocks 2 the speculative elec elec- electronics stocks and 3 a class which I consider growth stocks which group I would like to discuss today What is II a Growth Stock Unfortunately the general public tends to misunderstand the term growth As a re- re result suit sult it is often misused For example many people con con- confuse fuse real growth Issues with the more transitory situations The sad part of It ItIs Itis Is that the growth label Is most often misapplied during the latter stages of a bull buU mar ket when stocks are overprice ed A real growth stock Is one which has a proven record of Increasing profits sales and dividend payments Let me stress that true growth must include rising trends in both sales and profits An increase in sales without a commensurate ate rise In profits Is usually a sign of keen competition cost squeeze and or inefficient managements Basic Growth Factors Facton Growth is the result of a combination of factors which enables an Industry or comp comp- company any to Increase its sales and profits over a period of years One of the fundamental growth forces Is population In In- In Increase crease rease This Is the basis of po po- potential demand for goods and services However as Indian China and some other nations ns demonstrate purchasing pow pow- power er must grow along with pop pop- population population if an effective demand Is to be created When lation population growth outstrips the therise therise rise in purchasing power the result Is more likely economic stagnation and Increased pov pov- pov poverty erty Technological advances con con- constitute constitute another vital growth force This Is quite obvious at atthe atthe the present time because of the great Interest In science In the form of automation for example technological ad- ad advances ad vances can raise the level of productivity and lower pro pro- production and distribution costs The resultant Increase in ef ef- ef efficiency can do much to pro pro- promote promote mote growth Scientific break and new Inventions create improved products which In turn create employ employ- employment ment and Investment opportunities Remember however that while scientific progress opens up new vistas it can al so stymie the growth to in certain tain existing fields because of obsolescence and change In a sense this reminds me of Newtons Newton's Law and Action and Reaction |