Doubling your money.

By investing in growth companies, your club can double its money every five years

Your investment club can almost assure solid returns by investing in well-managed growth companies--their sales and earnings are increasing at a rate faster than their industries' in general. These companies reinvest most of their earnings in the business to expand operations and to generate new and improved products through research and development.

The Milwaukee Investment Club uses the National Association Guide, a methodology designed to help investors pick growth stocks. One of the club's cofounders, Robert Wynn explains, "the guide helps determine (1) Is this a good company, meaning, has it been growing 15% a year and will it continue to grow at that rate over the next five years? and (2) Is it currently selling at a good reasonable price? If we buy a company that is too high in price it could substantially set back our opportunity to have appreciable gains in the near term."

While your club's members are not expected to match wits with Wall Street analysts, they should be proficient in applying a few essential tests based on both fundamental and technical research.

Using the Stock Selection Guide requires members to draw a graph that plots each company's sales, earnings, and stock price fluctuations so that the group can get a visual analysis to determine if a company will meet a projected growth rate of 15% or more. The group looks at the company's price-to-earnings (P/E) ratio and where it stands in its respective industry. "Ideally, the P/E ratio should be less than or equal to the company's projected growth rate," adds Wynn. Members size up management's capabilities by looking at growing sales and earnings, pre-tax profit margin (sales minus costs divided by sales), and superior return on stockholder's equity (net earnings divided by the sum of the value of preferred stock, common stock, and retained earnings).

Like most groups, the Milwaukee Investment Club uses industry reports (available at your local library) published by big investment rating firms such as Standard and Poor's Corp. and Value Line Inc. to get figures on a company's growth rate in terms of sales and earnings over the past five to 10 years. The group of 18 African American men, professionals in their 30s to 50s, held their first meeting on Martin Luther King Day in January 1996. Wynn and cofounder Vincent Lyles were inspired to start the club by the Million Man March. With more than $35,000 under management, the club owns shares in 13 companies. Its top five holdings are: Cisco Systems (Nasdaq: (CSCO), General Electric (NYSE: GE), Citigroup (NYSE: C), Kohl's Corp. (NYSE: KSS), and Disney (NYSE: DIS).

The club's portfolio covers various industries from technology to consumer household goods to pharmaceuticals. "We take bottom-up approach, meaning, we look at individual companies first as opposed to a top-down approach, where you would choose a certain industry first and then go after companies within that area to invest," Wynn says.

Milwaukee Investment Club's Top Five Holdings

Company            Exchange/Symbol   Portfolio weighting   Price(*)

Kohl's Corp.         (NYSE: KSS)            17%            $57.88
Citigroup            (NYSE: C)              15%            $53.25
General Electric     (NYSE: GE)             16%            $54.62
Disney               (NYSE: DIS)             9%            $36.88
Cisco Systems        (Nasdaq: CSCO)          6%            $53.44

(*) Closing Price as of November 8, 2000