Who is Charles Kirkpatrick, and what is the Kirkpatrick Growth Screen?
Charles D. Kirkpatrick II is a technical analyst who spent decades trying to answer one narrow question: which stocks should you actually own right now? He laid out his answer in Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell (FT Press, 2008), and he co-wrote Technical Analysis, the reference text students read for the Chartered Market Technician (CMT) exam. Kirkpatrick holds the CMT designation, served as a director of the Market Technicians Association, and won the group's Charles H. Dow Award twice. The Kirkpatrick Growth Screen is the oldest of his three stock models — he began testing the approach in 1982.
The core idea: momentum with earnings behind it
Kirkpatrick does not forecast. He ranks every stock in the market on two "relative" measures and buys only the names that sit near the top of both. The first is relative price strength: the current weekly closing price divided by its own 26-week moving average. That reads a stock against its recent past rather than against an index, so a company counts as strong only if it is genuinely rising, not merely falling more slowly than the market. Each stock's reading is then ranked into a market-wide percentile.
The second measure is relative reported earnings growth, and Kirkpatrick built it to be hard to game. He uses reported operating earnings, not analyst estimates, and compares the last four quarters of operating earnings to the four quarters ending one quarter earlier. Because each side of that ratio spans a full year, seasonality washes out; because it uses operating earnings, one-time charges do not distort it; and only companies with positive earnings in both windows qualify. The Growth Screen buys momentum that accelerating profits can justify.
What the Kirkpatrick Growth Screen looks for
- Share price greater than $10.
- Market capitalization greater than $1 billion.
- Relative price strength — current weekly close divided by the 26-week moving average of weekly closes — ranked in the 90th percentile or higher, the top 10% of the market.
- Relative reported earnings growth — the last four quarters of operating earnings over the four-quarter total one quarter earlier — ranked in the 90th percentile or higher.
- No stocks that trade over the counter (OTC).
Both legs sit at the same demanding cutoff: a stock has to be in the strongest tenth of the market on price and the fastest-growing tenth on reported earnings at once. Few names clear both, which is the point.
Why the screen can work
From 1982 through the end of 2007, Kirkpatrick's hypothetical Growth portfolio grew more than 100-fold, against roughly 13-fold for the S&P 500 over the same stretch, while turning over close to twice a year. His research kept pointing to relative price strength as the most dependable of his short-term signals — "relative strength seems to breed more relative strength," as he wrote — and the earnings filter is there to keep the momentum attached to a business whose profits are still expanding, rather than to a story stock running on sentiment alone.
What to keep in mind
The two legs are not equally sturdy. In Kirkpatrick's own testing, reported earnings growth predicted future returns less reliably than either price strength or valuation, and the very fastest growers tended to lag afterward — torrid growth rarely holds, a caution John Neff also voiced. The earnings signal earned its keep in advancing markets and showed no relationship at all during bear markets. That makes the Growth Screen a rising-market engine: its high-momentum, high-growth names lead on the way up and can reverse sharply when the tape turns. The double 90th-percentile filter also yields a fast-turning, concentrated list, and the screen only tells you what to buy — Kirkpatrick sold a holding once its price strength slipped to the 30th percentile, its earnings-growth rank fell below the 70th, or its chart broke down.
Sources
Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell, Charles D. Kirkpatrick II, FT Press, 2008.
American Association of Individual Investors (AAII) — Stock Investor Pro screen definition.