More signs that you should double check the investment thesis of your stock

Part Deux of my signs that I need to double check my investment thesis on a stock:

1. Any company that tells you China presents the next opportunity for revenue growth.  Beware the lure of Chinese math – "If we just sell one gizmo to 1% of the Chinese population, we’ll make billions."  The latest example of this is Federal Signal (FSS).  The problem isn’t the size of the opportunity – the problem is the difficulty of competing in a communist-run economy against local companies that are much more savy and well connected.  In addition, once you get into the country-side, the majority of the 1 billion people make less than $100 a year.  There were scores and scores of companies that fell into the trap of ‘Chinese math’ in the 1990s including Gillette (one razor for every China man) among numerous other household product companies.  If you made $100 a year, how many $5 razors would you own?  Probably 0.  Not that I don’t think a company shouldn’t try to enter the Chinese market…it should.  But as an investor or a manager, I just wouldn’t bank on all future growth coming from this closed, communist country. The only company that this rule didn’t work on is Qualcom. 

2. Any company that’s in the cross hairs of the incomparable Herb Greenberg.  Whether you love him or hate him, you have to know what he’s saying about a company in which you are invested.  I have never known him to get facts wrong.  He spots problems.  Whether or not the management team can fix the problem is a completely different issue.  The only thing I think he’s been wrong about is timing – and that’s why I use technical analysis.
3. The company is approaching or just breaking the $100 mln, $600 mln or $5 billion revenue barrier.  In my experience, each of these milestones presents unique operational challenges for companies.  It’s a step-change in operational complexity to go from small to mid and from mid to large sized business.   And unfortunately,  the management team that brought the company to its current step doesn’t have the skills to take it to the next step without stumbling.   
4. The company is a “roll up”.  Any company that takes a small fragmented “mom and pop” industry, buys up a couple of the companies and plans on growing by doing more of the same, is doomed to failure.  I have never seen a roll-up concept do anything but crash and burn once the industry growth slows down.  The "mom and pops" are selling their companies to the "roll-up" because they know their company isn’t worth the high price the "roll up" is paying.  In other words, if you own the "roll-up" parent company stock, the "mom and pops" are selling to you at the top. 
5. A Wall Street analyst who covers the company, joins the company as its investor relations person.   You would think that this would be a good sign but its not.  Usually analysts who follow growth companies join the company because they think the stock is dramatically undervalued and the company isn’t doing a good job explaining the "story" to the Street.  However, the stock is usually "undervalued" because the Street knows something the analyst doesn’t.  The analyst has just bought into managements story and usually doesn’t have a good appreciation of the risks involved.  This rule has worked well with Hollywood Entertainment, Scient among many others.