Love integrates technical indicators to confirm the fundamental thesis. Two components stand out: Relative Strength and Volume.
To operationalize these theories, Love provides a screening framework for the modern investor:
No strategy is perfect. While looking for the investors must be aware of the blind spots:
Phase 1: Accumulation Phase 2: Acceleration Phase 3: Climax & Distribution [Flat Price / Hidden Value] -> [Surging Volume & Earnings] -> [Institutional Selling / Peak Hype] super performance stocks richard love pdf
When everyone is talking about the stock, and it becomes the darling of the media, it is often time to sell.
Unlike companies that pay out 100% of earnings as dividends, super performance stocks retain a significant portion. Love looked for a , provided the retained capital is earning that 15%+ ROIC.
: Relatively low but increasing (implying the big funds are just starting to discover the stock). While looking for the investors must be aware
Richard Love was an investment analyst and financial author who wrote during one of the most tumultuous economic eras in American history—the 1970s. Confronted with stagflation, soaring interest rates, and a stagnant broader market, Love set out to determine how certain select stocks managed to decouple from the macroeconomic gloom and achieve exponential growth.
While the financial markets have evolved with high-frequency trading and digital algorithms since 1977, human psychology and the laws of supply and demand remain unchanged. You can easily adapt Love’s principles using modern stock screeners. The Modern "Super Performance" Screener Criteria: : Under $2 billion (Small-cap or Micro-cap). EPS Growth (QoQ) : Greater than 25% to 50%.
: A sudden, large increase in profitability is the most important catalyst. Innovation : Relatively low but increasing (implying the big
Legally, the original Richard Love institutional memorandum is proprietary. However, several financial data aggregators have updated his methodology for the 2020s. If you cannot locate the original PDF, here is how to replicate it using modern tools (Bloomberg Terminal, Finviz, or Screener.co):
Love argued that these massive gains are rarely accidental. Instead, they are the result of a perfect alignment of structural financial metrics, corporate catalysts, and shifting market psychology. 3. The Core Anatomy of a Winner
While Love wrote his framework decades ago, the principles are timeless. Running the Love screens today might yield stocks like (hypothetical examples for educational use):
Love favored companies that could scale revenue rapidly without a proportional increase in operating expenses, leading to exploding profit margins. 4. The Five Phases of a Super Performance Cycle
He closely tracks Federal Reserve actions, noting that lower interest rates and fiscal stimulation create the ideal environment for superperformance stocks to thrive. Ivanhoff Capital 3. Selling Criteria