Morningstar’s Mike Trigg spelled out his recipe for investing in growth stocks. There are three ingredients: (1) strong unit growth (2) an emerging moat (3) a margin of safety. We’ll point out that it’s hard to find this trio together in the same company -- when you have strong unit growth and an emerging moat it usually comes with a high price tag—or little margin of safety.
Trigg thinks he has identified 3 companies that pass the three point inspection. The first one is video game company Activision (ATVI). Trigg sees it operating in an industry with high unit growth, producing best sellers (emerging moat), and valued at a current price that he calls “compelling