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Slow-Growth Stock

The stocks of slow-growth companies are just what the name implies. These are companies that have increased their sales and earnings over at least three years, but at less than the rate of GDP (gross domestic product) growth.

Slow growth is not necessarily a stigma. Many companies in this category are remarkably consistent, posting rising earnings year in and year out, and that dependability helps compensate for their slow growth. Most important, any company, no matter how slow growing, can make a terrific investment if the price is right.

Procter & Gamble PG fits the slow-growth mold for two reasons. First, it's big. Aside from a handful of phenomenal companies, few firms with annual sales over $50 billion can consistently post rapid profit growth. Eventually, companies exhaust their best investment ideas, and the law of diminishing returns sets in.

To learn more, see our Investing Classroom course on slow-growth stocks.

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