No, I'm not here to talk about the benefits of organic foods and the worlds obsession with eating organic leafy greens. Besides the applicable nature of the word 'organic' to foods, it is also something that companies are talking more about these days not in their CEO's vegetable gardens but in their earnings announcements.

Unfortunately in Asia, not much attention has been paid to this relatively good barometer of performance and organizational health, but investors are finally starting to take notice and companies are finally starting to see the value in talking about organic growth.

Wikipedia defines organic growth as 'the rate of business expansion through increasing output and sales as opposed to mergers, acquisitions and take-overs.' In more simplistic terms, growth from what you already had in your portfolio, not from what you recently acquired. Why is this such a good barometer to check the financial health of the company you may be asking?

Simple: paying attention to organic growth will tell you as an investor whether or not the company is generating its revenue from its existing lines, or through mergers and acquistions. Organic growth will also tell you whether or not past acquisitions are growing and contributing to the companies top line.

As an investor, In my humble opinion, I'd much rather see a company generate a substantially larger percentage of revenue from 'organic growth' rather than go for an astronomical increase in revenues YoY because they went on a buying spree. Long-term, organic growth says to me that a company can take what it has and financially and strategically be ok.

During this season, we have seen a lot of good growth in companies top line performance. However, don't be star-struck by headlines of '58% revenue growth thanks to acquisitions'. Sure, its good growth, but how did they do organically? Poor organic results signal poor long term health of a company.

In the United States, a number of CEO's love to tout their companies 'organic growth' figures in interviews that they give, and their earnings presentations. This particularly holds true for companies whose business is involved in tangible goods that they sell (for instance consumer products makers) because it is a much easier concept to get your mind around compared to a services provider.

Bottom line: always look for organic growth and include it in your benchmarks in assessing if a company may or may not be a good investment for you.

Curtis Bergh