First, Every Stock is Given a ValueRank Score Between 0 and 100, Based on Our Unique 12-Point Algorithm…
The Entire List is then Sorted from Highest-to-Lowest Ranking…
Trading Just the Top-Five Ranked Stocks, the Strategy has Generated an Average 32.2%/Yr Returns, Consistently Outperforming the S&P Benchmark Every Year Since January 2007…
Capital Growth: Jan 2007-Nov 2018 (Starting Cap: $10K)
Plus: 12 Years of Consistent Market Beating Performance
- Simple Five-Stock Portfolio, Rebalanced Weekly.
- Avg Return 32.2%/Year Since January 2007.
- Profitable Every Year Since Inception.
- Focused 100% on Easy-to-Trade, Large-Cap Stocks.
- Based on Systematic, ‘Free-Cash-Flow-Yield’ Algorithm.
- Outperformance vs the S&P500 Benchmark in 12/12 Years.
A Systematic Trading Plan for Serious Traders…
Whether professional or recreational, trading stocks is an exciting vocation – one that offers unlimited rewards to the few, while punishing those who come in starry-eyed, lacking discipline or a clear trading plan…
The vast majority of newcomers give up too early, often overwhelmed by mistakes and the resulting emotions. It is only a minority of traders who stay in the game, learn their lessons fast (and well), and develop a systematic trading plan…
These are the individuals who take up trading as a full-time profession. For these highly disciplined, self-directed individuals, there is no better business that allows them to continually elevate their standard of living, while enjoying the true freedom and autonomy that trading brings.
But where to start? with infinite variables in every stock, from dissecting line items in the quarterly profit/loss, balance sheet, and cash-flow statements, to industry-specific data, how does a trader make sense of all the information, in order to identify the right stocks to trade?
Keeping It Simple…
At valuScreen, we have been developing stock trading strategies for over fifteen years, with a focus on capturing deep-value, fundamentally superior stocks we believe will consistently outperform competing stocks in the same industry, and the S&P500 index.
Our systematic approach to trading, powered by a fully-automated algorithm, scans every ‘large-cap’ S&P500 stock (he top 500 companies by market-cap, traded on the major NYSE/Nasdaq stock exchanges) against multiple company fundamentals. Our objective is to capture the strongest, free-cash-flow generating businesses, with sustainable growth, which are currently [temporarily] undervalued.
Each weekend, our system automatically ranks every qualifying company into a ‘top-five-stocks’ sort-order, using a precise free-cash-flow-yield formula. The company which generates the highest sustainable free-cash-flow (relative to historical average) is ranked number one. The company with the next highest score is ranked second. And so on.
Our weekly list of top-five ranked stocks are emailed to our subscribers every weekend, ready for trading at Monday’s market open.
Twelve Years of Historical Performance Data, Averaging 32.2%/Year Returns…
Trading just five stocks, rebalanced weekly, our smart-portfolio has been profitable every year since inception. Moreover, the strategy has consistently outperformed the S&P500 benchmark in 12 out of twelve years.
Focused 100% on Easy-to-Trade Large-Cap Stocks…
The performance data above, and into the future can be easily replicated by our subscribers. This is because we trade only ‘large-cap’ stocks listed on the major NYSE/Nasdaq exchanges. In a word, this provides the ‘liquidity’ for many investors to buy/sell at the same time, with ease.
A large-cap stock is one which has a minimum market-capitalization of $5 Billion, and trades several hundred-thousand shares per day. Companies such as Apple, Amazon, Netflix, Home Depot, Caterpillar, are all well-known, established businesses which often show up in our top five.
Simplified Risk Management: Including a Fixed 5% Trailing Stop-Loss Applied to Every Trade…
Finding the right stocks to trade is only half the battle. For successful traders, disciplined risk management is the long term ‘survival factor’. Our risk management rules include the following…
(1) Only five stocks are held in the portfolio, with a maximum allocation of 20% capital per stock.
(2) On every trade, apply a fixed 5% trailing stop-loss.
The ‘trailing’ stop-loss allows profitable trades to run, while exiting the position if it moves 5% below the peak value since the position was opened.
For example, if we buy a stock at $30, and it moves up to a peak of $34, then starts to move down, the stop is place 5% below the $34 peak, ie., $32.30. If the stock drops to $32.30, the position is exited. If however, the stock never touches $32.30, but moves back up, beyond $34, and hits $38.55, then a new trailing stop-loss level is established at 5% below the $38.55 peak, ie., $36.62.
This process allows a stock to have enough room to maximize profit if it continually moves higher. If the stop-loss is hit, the position is closed. The following Monday, if the stock re-appears in the top five, it is purchased.
How We Know Which Five Stocks to Hold in the Portfolio…
Built upon professional, time-tested valuation methods, we developed our unique strategy by integrating 12 logical rules, taking into account key company fundamentals that capture quality growth businesses with robust, sustainable cash-flows and a healthy balance sheet.
The rules take into account key company fundamentals, derived from each company’s quarterly profit/loss, balance sheet, and cash-flow statements. Our fully-automated algorithm applies very specific quirks to how company data is read and interpreted…
For instance, we prefer to focus on gross profits (and margins) as opposed to just the sales revenue. We look specifically for current and expected improvements in free-cash-flow margins, instead of just looking blankly at EPS growth/expectations.
We dissect comparative value measures such as free-cash-flow-to-enterprise-value yield (FCF/EV), which imparts depth and accuracy (as this takes into account both market-cap and total debt baked into the equation), towards measuring cross-industry valuation multiples. This provides a superior edge, than relying on the more commonly used, and intrinsically flawed price-to-earnings (or P/E) ratio.
Most critically, we identify the strongest companies with the highest (relative to historical average) sustainable free-cash-flow yields. These are the top-five ranked stocks we hold in our five-stock smart-portfolio.
Based on historical testing, the results of the five-stock portfolio have proven to demonstrate profitability every year since inception, and consistent outperformance against the S&P500 benchmark in eleven out of eleven years…
- Starting Capital ($): $10,000
- Total Gains ($): $358,356
- Total Losses ($): $172,833
- Net Profit ($): $185,523
- Win/Loss Ratio: 2.07
- Return on Capital (%): 1,855%
- Avg Return/Year (%): 32.2%
Note: The results shown are based on algorithmic, simulated tests. Always keep in mind, trading does involve risk, and past performance is not necessarily indicative of future results.
Let Us Do The Math…
While the algorithm has been developed and finetuned through many years of experienced trading, keep in mind, that the entire process of identifying the weekly top-five stocks, is fully automated.
Our subscribers do not need to worry about every mathematical ratio, or complex fundamental or technical indicator.
Once we run our screener, the results automatically place every qualifying stock, based on the precise screening rules, into a watchlist, from which the stocks are ranked (top-five) in order of highest sustainable free-cash-flow yields, relative to historical levels.
Start Receiving the Latest Top-Five Stocks, Published 8pm Every Sunday…
We publish and email the top-five ranked stocks around 8pm, every Sunday evening.
Membership is currently limited to a maximum of 100 subscribers.
To sign up, please click on the ‘Subscribe’ button below. If you have any questions, please get in touch with us, at any time.