If you've been following Sheryl Sostarich's discussion of The Little Book That Makes You Rich by Louis Navellier over in the After Hours Book Forum, you may have been following along to see the eight fundamental factors that Navellier  claims have the most influence on a company's stock price.

• earnings revisions
• earnings surprises

These two have to do with changes in analysts perceptions of a company.  Earnings revisions may be important, but do they reflect anything other than analysts' misperceptions?  Earnings surprises are the result of a company's reported earnings not meeting analysts' expectations.

"We" tend to take the quarterly and annual numbers, and not focus so much on what analysts thought before these number are revealed.  We deal with the fundamentals, the actuals, the reported numbers.  Not on flights of fantasy.

Suppose, for example, that analysts are expecting a company to report $0.34 in quarterly earnings.  Now suppose that the company reports $0.33 and misses the expecation by a penny a share.  But suppose that 33 cents is up from 29 cents a year ago.  Isn't that a whole lot more important?

• sales growth

This appears on the Stock Selection Guide and on the Ratio Analyzer.  In the Ratio Analyzer analysis, there are several items that are compared to the sales growth rate.

• operating margin expansion

The Ratio Analyzer includes a section that looks at the Gross Margin.

• free cash flow

Check the extensive analysis of Cashflow in the Ratio Analyzer

• earnings growth

Earnings Growth is a key element of the Stock Selection Guide, and is a key item in the Quality Rating computed by Take Stock. 

The Sales and Earnings Growth Rates are a key to "our" fundamental analysis of a company.

• earnings momentum

Momentum, like expectations and surprises, is more of a psychological component, and isn't really part of the fundamental approach.  How do you think it should be used?

• return on equity

See, especially, Section 2 of the Stock Selection Guide and the TSSW in Take Stock.

I find it more than interesting, and quite comforting to know that Navellier's "eight fundamental factors" overlap five out of eight times with the key elements of our fundmental investing approach.  These items occupy prominent locations on the Stock Selection Guide, the Take Stock TSSW and analysis, and the Ratio Analyzer.

Maybe Louis should be using our tools!

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Extra credit:  What is Lagniappe, and why is it a good word to use this week?

Curiousity got the best of me:  Lagniappe

From Merriam-Webster Online Dicitionary:

And this is a word you'll most likely hear in New Orleans and the surrounding areas.  I thought it appropriate for use during (ok, at the end) of Carnival (Mardi Gras) week!

I'll be back later today with more of this workshop ...