Memo from the Desk of Eric Fry: Eric Fry, at your service. Louis Navellier, our trusted colleague at InvestorPlace, has recently rolled out an enhanced version of his exclusive stock selection system – the Stock Grader.
Today, Louis delves deep into this innovative tool, shedding light on its potential benefits for you, our esteemed readers.
Howdy, Reader!
We’ve all heard Aesop’s fable of “The Tortoise and the Hare.” An ancient, yet timeless tale imparting a potent message.
The tortoise and the hare engage in a race, with the hare relying on its speed and wit to secure victory over the slow-moving tortoise. However, lulled by arrogance, the hare takes a nap, assuming the tortoise would never catch up. Shockingly, the tortoise emerges victorious, underscoring the power of steady, deliberate progress over rash, impetuous actions.
The lesson? In the realm of growth investing, avoid being the hare. Don’t doze off while the market steadily ascends. Simultaneously, steer clear of making knee-jerk reactions based on ephemeral headlines or market fluctuations.
The truth is, there’s no shortage of “hares” out there – their worst adversaries. They miss prime buying opportunities by hesitating too long to act, and they’re hasty to offload investments at the first sign of trouble, trapped in a cycle of perpetual anxiety over their stocks.
On Wall Street, the tortoise is a rare gem. Armed with meticulous planning, they identify promising buying prospects early on, after rigorous scrutiny. Operating on factual data rather than emotional impulses, they weather speculative storms by basing decisions on analytical insight.
As a long-term quantitative investor with a penchant for delving into fundamentals, earnings, and sales growth, I align more with the tortoise mindset. I immerse myself in financial metrics to discern a stock’s resilience. If a stock proves sturdy, I might opt for a long-term investment. Conversely, if the fundamentals deteriorate, I maintain my distance regardless of the market’s fascination.
To pinpoint top-tier stocks, I leverage my acclaimed Portfolio Grader system, a cornerstone of my regular Market 360 pieces. Today, I’m thrilled to introduce its successor – the Stock Grader.
In this edition of Market 360, let’s explore Stock Grader’s features and unveil how you can utilize it to unearth fundamentally superior stocks amidst any market backdrop.
Introducing Stock Grader!
Upon landing on the Stock Grader’s homepage, you’ll encounter this:
Stock Grader mirrors the functionalities of Portfolio Grader. You input a specific stock, and it presents the Fundamental Grade, Quantitative Grade, and the stock’s report card.
The Fundamental Grade hinges on eight key factors:
1. Sales Growth: Companies striving for continuous month-to-month and year-over-year sales expansion exhibit robust potential for growth.
2. Operating Margin Growth: A widening margin – the variance between production costs and retail prices – signals a company’s ability to elevate its operational efficiency.
3. Earnings Growth: Sustained year-over-year increase in earnings indicates a company’s financial health and potential for growth.
4. Earnings Momentum: The pace of a company’s earnings growth significantly influences investment returns.
5. Earnings Surprises: Companies surpassing analyst earnings estimates often trigger notable share price upticks, reflecting shareholder optimism.
6. Analyst Earnings Revisions: Upward adjustments in earnings estimates by market analysts underscore optimistic growth prospects.
7. Cash Flow: Monitoring the flow of cash earned against expenditures provides insights into a company’s financial stability.
8. Return on Equity: This metric gauges a company’s profit generation efficiency relative to shareholder investments.
The Quantitative Grade evaluates a stock’s institutional buying pressure, offering a glimpse into the stock’s market sentiment cast by institutional investors.
