We chosen firms based mostly solely on basic assessments, with out “expertise.” In actual fact, there have been few parameters:
1) An important factor is liquidity. To have the ability to purchase and promote at one of the best worth with out having to search for a purchaser / vendor. To do that, we sorted firms by the quantity of buying and selling quantity per day, in items: above 200 thousand per day, each the common (Common quantity) and for the final day of buying and selling (Present
2) Profitability (profitabiliy). That is proven by the P / E multiplier, the ratio of market capitalization to earnings. For the present P / E, we’ve got chosen a price> 0 – higher than zero, it does not matter what the revenue is, the principle factor is what’s; however for the longer term (Ahead P / E), the projected revenue subsequent 12 months, we’ve got chosen
3) An essential ingredient in our technique would be the absence of debt from the corporate: leverage is a form of anchor for shares, which considerably limits their progress. Since we don’t kind shares by capitalization, the dearth of debt burden is a crucial plus;
4) The ultimate parameter, which is able to decide the corporate as steady and powerful, would be the ratio of capitalization to free money movement (P / FCF) – it can be crucial for us that the chosen firms often generate money movement, which is able to verify their standing of a “protected haven” – within the case of a market panic, these are the businesses that turn out to be the item of funding.
Thus, we would have liked solely Four easy parameters – however solely 22 out of 7855 shares correspond to them: