February 6, 2020
Analysing new investment ideas can be daunting, even for experienced investors.
We’ve created our app to make the process quick, simple and help you feel confident that you’re making the right decisions.
If you’re trying the app for the first time then this step-by-step guide to analysing a stock will help you get started.
We monitor over 5,800 publicly traded stocks. For each of those stocks, we’ve identified and calculated a range of performance metrics that measure the company’s potential as a long-term investment. These figures are summarised into three main categories - Quality, Value and Momentum - which are then used to rank the stocks relative strength in these categories, compared to a global stock universe.
In this example we’ll analyse Apple. To get started in the app, head to the Discover tab and tap the search icon, then type the name of the company in the search bar.
You’ll see Apple’s ‘shield’ displaying their Quality, Value and Momentum ranks, compared to the rest of the stocks that we monitor, aka our stock universe.
To highlight the fact that Apple’s Quality and Momentum rankings are in the top 20% of stocks in our universe, they have a regal gold border.
When you tap on Apple’s card you’ll be taken to a more detailed profile, containing useful information that’ll help you evaluate the company’s potential as an investment. We call this the Scorecard.
You’ll see the same three rings representing Apple’s Quality, Value and Momentum ranks, together with those numerical ranks directly beneath the logo. The more a ring is filled in, the better the rank. The ‘From:’ label and the number beside it lets you know how many other stocks it’s being compared to.
Further down the page you’ll see line charts displaying the changes in Apple’s Quality, Value and Momentum ranks over the last 12 days.
If you drag your finger over the line in the line graph, you can see the factor’s rank at each point in time, to check how much it’s changed recently. You’ll see the description of the stock’s ranking update too e.g. “High [Quality]”, “Expensive” [Value] and “Very strong [Momentum]”.
Apple’s current Quality rank of 623, compared to our global universe of 5,800+ stocks shows that the company is enjoying relatively healthy growth.
To give you greater insights we break this down into three sub-factors that contribute to our Quality assessment.
As the company with the world’s largest market capitalisation, it’s perhaps unsurprising to see that Apple’s Value ranking is quite low at 4,805. The Value factor measures the cheapness of its stock by comparing Apple’s share price with several financial metrics such as profit, cash flow and enterprise value. Based on these measures, Apple is a very expensive stock to invest in.
Lastly we’ve added Momentum factors to our analysis, which measures the operating performance of a company against market expectations. This ranking will often change based on news and rating upgrades or downgrades from analysts who review the stock on behalf of financial institutions.
Apple’s Momentum rank of 103 reflects its popularity and the optimism for its future growth from the investors and analysts.
On top of the analysis of the three key factors, the Scorecard includes ranks and statistics for other key considerations.
We’ve also created several graphics to help visualise some useful statistics about the stocks. In Apple’s case we can see the stock has consistently exceeded the markets’ expectations for its Revenue and Earnings Per Share targets.
You can also check whether Apple Inc is rated as an investment opportunity by those analysts (Buy, Hold or Sell) and any ratings changes that’ve taken place over the past 30 days for this stock.
Hopefully you can start to see how to interpret the rankings in our app to spot potential investment ideas. Throughout the app you’ll see an 🛈 icon, tap the icon to see an explanation of what you’re viewing. If you have any questions about how to use this information to analyse stocks and funds, just drop us a message in the app.
Genuine Impact does not provide investment advice or personal recommendations and individual investors should make their own decisions or seek independent advice. This blog post does not contain all of the information that you need to consider before making an investment. Please also bear in mind that the rankings change on a daily basis so you’ll need to check the app rather than relying on the figures in this post.