The Lynch Stock Groups

Fast Growers
These companies have little debt, are growing earnings at 20% to 50% a year, and have a stock price-to-earnings ratio below the company's earnings growth rate. Investing in these types of stocks makes sense for investors who want to find solidly financed, fast-growing companies at reasonable prices.

Slow Growers
Here Lynch is looking for companies with high dividend payouts, since dividends are the main reason for investing in slow-growth companies. Among other things, he also requires that such companies have sales in excess of $1 billion, sales that generally are growing faster than inventories, a low yield-adjusted price/earnings-to-growth ratio, and a reasonable debt-to-equity ratio. Investing in these types of stocks makes sense for income-oriented investors.

Stalwarts
Stalwarts have only moderate earnings growth but hold the potential for 30%-to-50% stock price gains over a two-year period if they can be purchased at attractive prices. Characteristics include positive earnings; a debt to equity ratio of .33 or less; sales rates that generally are increasing in line with, or ahead of, inventories; and a low yield-adjusted price/earnings-to-growth ratio. Investing in these types of stocks makes sense for investors who aren't willing to pay up for high-growth companies but still want the chance to enjoy significant capital gains.

Cyclicals
Companies whose earnings rise and fall as the economy booms and busts
Turnarounds - companies with temporarily depressed earnings, but good prospects for recovery.

Asset plays
Companies whose shares are worth less than their assets, provided these assets could be sold off for at least book value.