Locating growing stocks is both an art and a science.  Everyone has their favorite method of finding growth stocks for their portfolio.  While there is no specific way to define growth stocks, the one constant is every investor is seeking price appreciation in their portfolio.

I strongly believe that small stocks have a better chance of doubling or even tripling than high priced stocks.  When I say small stocks, I am talking about stocks that trade for under $5.00 per share.  These small stocks are often from companies that are more innovative and simply faster growing than their larger brethren.  You see small companies have no choice but to grow or die.  I like finding small growth stocks with great upside potential.

I locate these stocks by running a dividend growth stock screener on shares trading for under $5.00  I alter the screener to search for certain technical factors that lead me to believe the company makes a good buy at the current level.

My technical search for stocks that have retreated from their highs, have found technical support and price has retraced higher above the 50 day simple moving average.

I don’t rely on technical factors alone.

Once the screen has located suitable candidates, I research the fundamentals, economic conditions, and potential catalysts that will trigger additional buying to supercharge price.

Once I have located a strong candidate as a fast growing stock, I like to buy a small amount of shares at first.  As the price moves higher, adding to this position until my full position size is reached is the best way to enter these small fast growing stocks.  The reason being is that by moving higher the stock is confirming your original hypothesis thus making buying more shares a smart move.  If the stock doesn’t move as expected, you are only risking small size at first.