Our Process

The Oberweis Aperture

Oberweis Asset Management, Inc. focuses on investing in small- and mid-cap, emerging-growth stocks. We specialize in shedding light on up-and-coming companies with the potential for increasing profitability and accelerating growth. To identify these companies, we rely on an eight-stage stock selection filter based on key investment traits. Taken together, these eight criteria define the Oberweis Aperture.

Applying A Growth-centric Lens

We specialize in shedding light on up-and-coming companies with the potential for increasing profitability and accelerating growth. To identify these companies, we rely on an eight-stage stock selection filter based on key investment traits. Taken together, these eight criteria define the Oberweis Growth Aperture.

The Oberweis Growth Aperture allows us to discern those companies that are experiencing superior growth and have the potential to continue doing so. It also helps us to buy these companies at reasonably attractive prices — valuations that don’t yet fully reflect their earnings potential. The Aperture strategy, in short, deepens our insight and brings sharper focus to our stock selection process.

Also, by helping us to avoid overpaying for stocks with solid growth potential, this approach can help us fine-tune our exposure to better manage the risks associated with investing in smaller-cap stocks.

Unrecognized Revenue Growth

We invest in companies with either rapid revenue growth or revenue growth that we believe will significantly exceed analysts’ estimates.

Unrecognized Earnings Growth

We invest in companies that we believe will grow profits much faster than analysts expect.

Sustainability

We invest in sustainable businesses with a strong competitive position driven by niche market leadership, intellectual capital, or unique manufacturing processes. Put another way, we look for a high barrier to competitive entry.

Operating Leverage

We invest in profitable and scalable business models, which tend to generate rising net profit margins as revenue growth accelerates.

Valuation

We invest in businesses that are significantly undervalued based on PEG ratio calculations using our earnings estimates and growth forecasts.

Timely Catalyst

We look for a recent positive earnings release or an earnings surprise that tangibly and quantitatively begins to confirm that analyst expectations are too low.

Inflection Point of Change

We look for businesses at the inflection point of change — often from a new product, a new management team, or a regulatory change — as these changes can drive unexpected or underestimated growth. We invest in firms with significant gaps between our forecasts and analyst expectations.

Limited Analyst Coverage

We look for small- and mid-cap firms not widely followed by other analysts to maximize the chances of finding misunderstood situations.


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