We look at 3 different metrics to help build a list of winning stocks that are low-risk, high-upside given their rock-solid balance sheets. This is the ultimate Do-It-Yourself lesson.
First, look for positive financial growth and low debt exposure using the Piotroski F-Score. This is a nine-point system that rewards each company for meeting a certain criterion on its balance sheet. If the company meets all nine criteria, it has an F-Score of 9, which means it’s perfect,
Next, the Altman Z-Score is a weighted average of five metrics to determine whether a company might go out of a business. If a company falls below 2.6, it has a risky balance sheet. That risk is tied to a balance sheet that likely has lots of debt or weak cash flow. We are looking for stocks with a Z-score of 3 or higher.
Lastly, check the company’s valuation rank. We use EV/EBIT to allow us to have a proper “apples to oranges” comparison today. We aim for stocks with attractive buyout values, keeping the number at roughly 7 or less. This is pure forensic analysis.
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Here’s a brief recap of what I talked about on ATP:
Whether we’re in a recession yet
Which stocks and sectors have led the selloff
What positive signs I’m seeing that mean we could be near a bottom
Any standard definition of a recession insists than two consecutive quarters of negative GDP growth qualify as a recession.
So while last quarter’s numbers aren’t completely official yet, and there will be some experts who still argue around the margins, most people realize, the recession has officially started.
But it’s not all bad news.
There are some levels I’m seeing that could be a sign of positive things to come.
Check out the session to learn more of what I’m talking about.
And if you’re looking for a way to take advantage of hot stocks while we enter a new quarter, you should check out Jeff Zananiri’s “Monthly Money Flows” strategy.
It requires only two trades a month, but it seems pretty impressive, just listening to Jeff talk about it.
Jeffry Turnmire and InvestPub do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
Daily Profit Publishing and Jeffry Turnmire do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
We are not licensed to provide you personalized investment advice. Nothing in these communications should be construed as personal investment or financial advice.
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