- Growth
Investment Value, GIV. This is our proprietary estimate
of the total return percent advantage from stock ownership over the
next five (5) years relative to a five (5) year treasury security
(used as a reference due to its presumed safety). The effects of
taxes are disregarded, since they vary widely depending on
individual circumstances. Values of GIV range from minus values,
meaning that T-Bills offer a superior return, to values up to 200%
or more.
Note: Future estimates will only
come to fruition if earnings and dividend projections are achieved
or exceeded and if it is possible to sell the stock after five years
at a price at least consistent with the nominal PE presented.
- Number of
Years (#YRS): This is the length of time it is expected
to take, assuming the predicted earnings growth rate is achieved
during the interim and price does not change, for PE to reach the
nominal PE value shown. In a sense, this is the length of time
investors tempted to overpay for a high priced stock must hope that
earnings targets are met. Any earnings disappointment for such
stocks is likely to be greeted by a significant drop in stock price,
as illustrated by many recent examples.
- Accumulation-Distribution
Rating, AC DIS: This rating indicates whether recent
trading has been driven by buyers or sellers. Range is
1 to 5 and low values are best, with 3 neutral. Stocks
in favorable price trends usually have values in the 1 to 3
range. Investors should generally avoid buying
stocks which exhibit a distinct downward price trend.
- Growth
Rating, GR: Evaluation of earnings growth consistency and
persistence, ranging from very consistent (1) to rather erratic
but generally up on average (3). Stocks with poorer GR
values of 4 or 5 are generally eliminated from our lists. GR can also be interpreted as a measure of quality or
performance probability for each stock as a potential growth
portfolio candidate.
- Consensus
of Investment Analysts (CIA): The degree of analyst
support. The range is 1-9, with 1.0 denoting very strong support,
9.0 denoting a strong sell bias, 5.0 neutral, and values ranging
from 1.0 to 9.0 indicating progressively weaker levels of support.
Stocks with CIA less than 5.0 should usually be avoided as new
purchases, although in some cases this may present an opportunity to
accumulate them at reasonable prices if they are desirable as long
term investments. It is seldom advisable to buy a stock when
analysts recommend that it be sold.
- General
Rating (GEN RTG): This is a combined quality rating based
on recent price and earnings trends, growth consistency, etc. The
value range is 0-9, with 9 best. Refer to Investor's
Business Daily for updated and more precise values of
several useful technical ratings, including this one.
- Industry
Rank (IND): A measure of the relative earnings growth
projections for companies in the same business area. The range is
0-9, with small values indicating the most optimistic projections
and increasing values showing progressively weaker growth
projections. The mid-range values are not of great significance.
Some industries, utilities for example, consistently rank poorly and
this should be taken into account when using this criterion in
making investment decisions. Industry rank is also
presented in Investors Business Daily.
- Master
Indicator, MI: MI is a composite indicator derived as a
penalty function from the various criteria discussed above. Weakness
in any of the evaluation criteria considered important in making
investment decisions adds to the value of MI, with significant
weakness in any one area generally contributing at least 4-5 points
to the cumulative value. The MI range is roughly 0-50, with smaller
values best. New purchases of stocks with values of MI above 8-10
should generally be avoided. Values below 5 are most desirable,
although under bullish market conditions such values may be hard to
find.
- Buy
Flags: Stocks which rate particularly well according to
all evaluation criteria are flagged as candidates which seem to
merit serious consideration for investment purposes. Three flags,
A-, A, and A+ denote stocks which are rated progressively better
by our computer rating system according to the complete set of evaluation criteria.
Stocks rated in these categories generally do not have
any serious flaw as indicated by any of the primary rating criteria.
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