Make More Money with Less Risk Using a Proven Stock-Selection Strategy…
Every week, we screen and rank (sort-order) hundreds of S&P stocks to capture the top-five, most undervalued growth companies, based on a unique 12-rule algorithm…
Over the past 11 years, our five-stocks/week portfolio has generated an average 45.9%/year profits, consistently outperforming the S&P benchmark every year since Dec 2007.
From Five-Hundred S&P Stocks to the Weekly Top-Five. In 2 Steps…
Step 1: Every Friday, after the market close, our computers run a systematic algorithm which screens every S&P500 company, against a precise 12-rule combination of company fundamentals + technical-analysis indicators.
Every stock is given a smartRank score between 0-100, based on the unique 12-rule algorithm.
Step 2: The entire list of stocks is then organized into a precise sort-order (ranking) from highest-to-lowest smartRank score. Stocks near the top of the list provide the most optimum, deep-value trading ideas/opportunities.
Every Buy, Sell and Hold. Clearly Defined…
Every Friday (after the market close), we run the 2-step stock-screen/ranking process above, in order to check if there have been any changes to the previous weeks top-five ranked stocks.
Similar to the football league tables, on any particular week, some of the stocks will continue to remain in the top-five. Some stocks will drop below the top-five, others will newly enter the top-five.
The rules are simple…
Whenever a new stock enters the top-five, this represents a ‘buy’ signal for that stock. Whenever a stock drops below the top-five, this represents a ‘sell’ (exit) signal for that stock.
As long as a stock stays in the top-five rankings, we continue to ‘hold’ that stock.
Trading the five-stock portfolio, the model has generated an average 45.9%/year returns (without using any margin), consistently outperforming the S&P500 benchmark in 11/11 years since December 2007.
- SmartRank Five-Stock Portfolio Avg Return/Year: 46.9% 46.9%
- SmartRank Avg Profit-Per-Trade (Annualized): 26.46% 26.46%
- S&P500 Benchmark Avg Return/Year: 9.04% 9.04%
A Complete, Systematic Trading Plan-of-Action…
With so many variables affecting the direction of a company – from product innovation to operating efficiency, sales sustainability, gross margin, free-cash-flow yield, debt levels relative to capital, institutional money flow, technical analysis patterns (oversold, overbought, relative volume), etc., how does a trader know where exactly to focus their attention?
Information alone is not enough. We presently live in a world where there is already information overload. So, what exactly does a trader need to look for, precisely?
What is needed is intuitive knowledge from fellow self-directed traders who – through years of experience – have come to know the metrics, and mathematical indicators that actually work in todays stock market, and the ones to avoid (such as the commonly touted P/E ratio).
Through rigorous testing and application of advanced metrics, such as free-cash-flow yields, gross-margins, debt/capital ratios, and institutional money-flow, we have learnt a thing or two about which specific indicators actually work.
Our trading method is borne out of this endeavour – to harness technology, and develop a systematic approach to trading, successfully integrating both company fundamentals and technical timing.
The 12 factor algorithm we apply to our stock-screening and ranking method did not just arrive per chance. It is the manifest result of years of trading experience, testing and re-testing on multiple time-frames of data, ensuring the highest quality of data integrity throughout the process…
Powered by a proven, fully-automated 12-point algorithm, the screener instantly scans every stock against multiple company fundamentals, and technical analysis indicators. We call this method factor-based investing…
Factor-Based Investing – Simplified…
Trading is never (and should never be) based on one or two indicators alone. In Jack Schwagers book “Market Wizards: Interviews with Top Traders”, there is clear evidence some of the worlds most successful self-directed investors apply a combination of indicators (factors), integrating both company fundamentals, and technical entry timing.
Each individual indicator/factor has its merit. The objective with factor-investing is to combine the rules into a more complete, fully-integrated stock-selection method.
So, how does factor-based investing work?
In the below example, you can see a very simple 4-factor model algorithm. A single factor can be any indicator (can be fundamental such as ‘gross margin’, or technical, such as ‘relative volume flow’)…
Each factor is given a score depending on how that indicator is performing ‘relative’ to history. For instance gross-margins relative to history (factor 1 below) has a high score, as the current GPM is high relative to historical equilibrium. Each factor is also given a ‘weighting’ (depending on its significance towards the total weight of 100%). Adding up the ‘weighted-scores’ results in a final rankable-score.
Building a factor-based trading algorithm begins with a clear theme/objective. In our smartRank algorithm, we initially look for companies which exhibit continuing growth in sales revenue with sustainable gross margins, reasonable-to-low debt/capital levels, and strong [sustainable] operating and free-cash-flow margins. These (amongst others) are our core fundamental requirements.
From this initial shortlist of quality [sustainable growth] businesses, the algorithm targets specific stocks that have undergone a recent technical pullback, combined with pattern price/volume activity (including institutional money-flow) signaling a high-probability recovery/rally.
Specifically, we apply 12 distinctive rules (factors) which combine both fundamental metrics, and technical-timing indicators. These are…
- Gross Margin (relative to history)
- Free Cash Flow Margin (relative to history)
- Price/Sales Ratio (relative to history)
- Price/FCF Ratio (relative to history)
- Price/EBIT Ratio (relative to history)
- FCF/Capital Ratio
- Debt/Capital Ratio
- FCF Margin Growth
- Revenue Sustainability
- Institutional (Smart) Money-Flow
- Relative Volume Trend
- Technical Analysis Indicators (Oversold)
A precise formula combines all 12 factors, resulting in a single, simplified smartRank score, for each of the five-hundred S&P companies we track.
Every weekend, we sort-order (rank) every qualifying stock, from highest smartRank score, to the lowest. Our top-five ranking stocks are then published…
Become a Smarter, Better-Informed, Better-Prepared Trader…
Every Sunday around 6pm, we publish the latest, top-five ranked S&P500 stocks, based on the strategy. This allows us (and our subscribers) to see all the latest ‘buys’, ‘holds’ and ‘sells’…
We ‘buy’ any new stock which has entered the top-five. We ‘sell’ (exit) any stock no longer in the top-five. We ‘hold’ any stock which continues to remain in the top-five.
As a subscriber, having access to pre-screened, superior-quality stock picks will save hours of research time capturing those companies which offer the best value, relative to the 12-point algorithm…
We do all the research, and our unique factor-based algorithm identifies the stocks that meet the 12-point criteria. Our subscribers simply execute the trades, and follow the model.
The algo not only identifies the most up-to-date deep-value trading ideas, but does so by utilizing highly advanced, institutional level research/analytics…
We don’t just follow the commonly used ratios such as the pot-luck P/E ratio or the media-driven earnings-per-share (EPS) beats. Instead, we prefer to focus on advanced, ‘deeper-insight’ company metrics we have thoroughly tested and entrusted to deliver profitable trades, consistently…
This includes such metrics as price-to-free-cash-flow (Price/FCF), free-cash-flow-to-capital (FCF/Capital), institutional buyside money-flow, etc.
Moreover, we take these professional metrics/ratio’s, and critically measure them ‘relative’ to each company’s historical average (or ‘equilibrium’). This function is fully built into the algorithm.
Let Us Do the Math…
While the method has been developed through years of real-time trading (focused on S&P500 stocks), and rigorous testing, keep in mind that the entire process we use to capture the weekly top-five ranking stocks, is fully automated.
Our subscribers do not need to worry about every mathematical ratio, or complex fundamental or technical indicator.
As a valued member, you are receiving over 20 years of research, experience and knowledge of what works in the stock market (and steering clear of what doesn’t). Our process is simple and objective, and focuses only on the stocks we believe will move higher.
As a subscriber, you will receive the following…
- Every Sunday, around 6pm, we send each member an email report (PDF format).
- The report shows the top-five ranking stocks based on the 12-point method.
- If a new stock enters the top-five, that stock is ‘bought’ at the Monday open.
- If a previously held stock no longer appears in the top-five, that stock is ‘sold’ at the open.
- If a stock re-appears from the previous week, that stock is ‘held’.
- Members will have full access to our helpdesk at any time throughout membership.
- Ask any questions, no matter how simple or complex – we are here to help you advance.
We don’t just stop at providing our weekly top-five report. Our goal is to make you a smarter, better informed, better-prepared trader. You will build confidence witnessing market-outperformance, trading alongside experienced, fully knowledgeable, self-directed traders.
We combine deep research, with a precise rule-based stock-selection approach. The result is a more superior, complete trading plan-of-action – one that has proven to deliver consistent profitability and outperformance against the stock market year after year.
Join us today, and start elevating your trading to a new level.
To maintain a high level of customer service, we have a strict limit on memberships to a maximum of 100 subscribers. Our membership rate is fixed at $139/quarter (full 3 months access, cancel anytime). To get started right now, click the subscribe link below.
If you have any questions (at any time), please get in touch with us.
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