3 Stock Factors to Beat the Market

My trading system Apex Alert is designed to do two things. First, it identifies the ideal time to own a specific sector. Then it finds the top stock to trade in that sector.

Finding the right stock takes time — and a proven method. I use the Money & Markets Green Zone Power Ratings system to find the highest-rated stock. This powerful tool efficiently rates stocks (0 through 100) based on several important factors.

Green Zone Power Ratings search bar

Now, “factors” is a specific term in the investment world.

It refers to a characteristic that researchers have proved can beat the stock market. There are dozens of factors. Some provide only a small edge. Some aren’t easily traded. And others can help investors improve their trading results significantly…

Using Stock Factors That Beat the Market

In building the Power Ratings system, Adam O’Dell focused on factors with a proven track record. Specifically, he looks at value and momentum, the best-known factors. But he also uses lesser-known ones like quality that’s worth taking a closer look at today.

The quality factor is associated with the financial health of a company and prioritizes stability. High-quality companies are likely to continue delivering strong earnings, which in turn should boost the stock price.

This is different than other approaches like growth or value investing. These factors consider the stock price.

Quality is defined by the company’s financial statements. It includes metrics like return on equity (ROE) or profit margins.

Return on equity measures a company’s ability to generate profits from its shareholders’ equity. Shareholder’s equity is the amount of money investors put into the company. A high ROE indicates efficient use of equity to generate profits, signifying a quality company.

As for profit margins, those can be measured in several ways. Net profit margin shows how much money the company made for each dollar of sales. Operating margins show the amount of money the company before considering accounting charges. High and stable profit margins confirm that the company is well-run.

Quality also includes metrics like the debt-to-equity (D/E) ratio. This ratio compares a company’s total liabilities to its shareholder equity. A lower D/E ratio suggests that a company is not excessively leveraged and is likely to be able to survive an economic downturn.

To many investors, quality companies are the ideal investments. But finding them requires us to dig deep. Fortunately, Power Ratings does the heavy lifting. It provides a quality score for each stock company, helping us to zoom in on the ideal assets.

By focusing on highly rated stocks, we can quickly find the right stock for the profit window identified by the Apex Alert strategy.

This strategy has the power to deliver a 64% annualized return, which is more than three times the size of Berkshire, Bridgewater and the Baupost Group’s annualized returns. And a decades’ worth of data in our study shows that it never had a losing year.

To learn how you can take advantage of this proven way of finding winning stock trades in the top sectors each month, watch my Apex Profit Calendar demonstration here.

Regards,

Michael Carr's Signature
Michael Carr
Editor, Precision Profits

 

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