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Favorite Stock 1

The rating is given based on ten criterias:

1. Max Gain / Loss – Based on 5 years high/ low and comparing  with current price,  max gain and loss is calculated, which is further considered as max reward and loss. If the  reward is 5 times of the risk, rating is to  buy,  and if reward is between 0 to 5 times, rating is to hold. If reward is lower than risk,  the rating is it should be sold.

2. Max Gain / Loss – Based on 52 weeks high / low and comparing  with current price,  the max gain and loss is calculated, which is further   considered as max reward and loss. If reward is 5 times of the risk, rating is buy, if reward is between 0 to 5 times, rating is hold. If reward is lower than risk, rating is sell.

3. Stock level – Based on 5 years high / low, high/ medium / low ranges are defined. If  the current price is in high range, the rating is sell. If the  current price is  in the  medium range, rating is hold. If current price is in low range, rating is buy.

4. Stock level – Based on 52 weeks high / low, high, medium and low ranges are define. If the current price is in high range, rating is to sell. If current price is  in the  medium range, the rating is to  hold. If current price is in low range, rating is to buy.

5. Book Value – If the current price is lower than the book value, rating is buy. If the  current price isbetween 100% to 120% of the book value, rating is hold. Otherwise the  rating is sell.

6. Liquidation value – If  the current price is lower than the liquidation value, rating is buy. If the current price is between 100% to 120% of the liquidation value, rating is hold. Otherwise the  rating is sell. Liquidation is shareholder equity minus intangibles.

7. NPV of future earnings – If the  current price is 90% or lower of the NPV of future earnings, rating is buy. If  the current price is between 90% to 100% of the NPV of future earnings,  the rating is hold. Otherwise the  rating is sell.

8. NPV of future cash flow – If the  current price is 90% or lower of the NPV of future cash flow,  the rating is buy. If the current price is between 90% to 100% of the NPV of future cashflow,the  rating is hold. Otherwise the  rating is sell. Cashflow is calculated by Net Income plus Depreciation minus Capital Expenditure.

9. Maximum suggested investment – Maximum suggested investment is 1% of daily average volume traded at the  current price. This is to address the liquidity risk. If the suggested maximum investment is higher than $25,000, the rating is buy. If the suggested maximum investment is less than $5,000, the rating is sell. Otherwise, the rating is hold.

10. PE stock vs industry – PE ratio of industry divided by PE ratio of stock. If the industry’s   PE is higher than the stock, the rating is buy. Otherwise the  rating is sell.

 

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