[[Start here]] → [[What works in stocks?|what works]] → [[diversify for resilience|diversity]] → [[there are six different categories of winning stocks|classifications]] → slow growers --- ![[slow-growers.png]] Peter Lynch stated in [[Lynch - One Up On Wall Street|One Up On Wall Street]] that [[there are six different categories of winning stocks]]. Slow Growers was one of them. "No excitement here". ## About slow growers - Slow growers are large companies that can grow only slightly faster than GDP. - Slow growers started as fast growers. They've just matured. - e.g. Utilities were the fast growers of the 50s, 60s. Now they are slow growers. I expect social media companies will end up the utilities of the future. - A sure sign of a slow grower is a generous dividend, because they can't use the capital to expand the business. - They tend to have share price charts that barely do anything over time - they are "like a topographical map of Delaware, which has no hills". > [!quote] Peter Lynch[^1] > Sooner or later every popular fast-growing industry becomes a slow growing industry, and numerous analysts and prognosticators are fooled. There's always a tendency to think that things will never change. ## How to deal in slow growers - You buy these stocks for the dividends "why else would you own them?" - Beware of slow growers that don't pay dividends, they are likely to piss it all away on diworseifications. ## Typical two minute monologue > "This company has increased earnings every year for the last ten, it offers an attractive yield, it's never reduced or suspended a dividend, and in fact it's raised the dividend during good times and bad, including the last three recessions. It's a telephone utility, and the new cellular operations may add a substantial kicker to the growth rate." ## When to sell a slow grower Sell when they’ve risen 30-50% or fundamentals deteriorate. Loss of market share for two years. No new products developed, R&D spend is down. Acquisitions look like diworseification and announces it’s “looking for acquisitions”. Balance sheet has deteriorated to having lots of debt. Even at a lower price, the yield will not be high enought. [^1]: [[Lynch - One Up On Wall Street|One Up On Wall Street]] - Lynch p111