KEY CRITERIA

FUNDAMENTAL

Companies are in business to make money. Therefore, I favor companies which are likely to produce above industry bottom line growth without losing competitive advantage. I look for healthy top line growth and stable or improving margins.

SENTIMENT

People are happy and optimistic or disappointed and worried when conditions change. The level from which the change occurs does not matter. Therefore, I favor companies which are likely to produce incrementally better news. I look for upward revisions to revenue and earnings estimates by analysts. I look for companies which can execute above expectations (i.e. beating analyst estimates).

PERCEPTION
Stock price action often dictates perception of a business, because price is the most often watched and easily quantified success measure. Therefore, I favor companies with stock price which is exhibiting positive action either short or long term.

CATALYSTS
Stocks prices move on supply and demand. News puts companies in the spotlight for investor buy/sell consideration. Therefore, I favor companies which are likely to generate favorable news and/or be discussed positively by media sources, analysts and market pundits.

TECHNICAL

Using charts to analyze price action for making decisions is widespread. Technical levels alone can stimulate activity in a stock and even serve as a catalyst for analysts to change ratings and price targets. Therefore, I favor companies when stock price is at chart levels which can provide buy interest.

VALUATION

Stock performance beyond actual and realistically projected profit growth comes from mispricing. Mispricing allows for opportunity and risk. I favor companies with valuations which are low or acceptable for actual and estimated sustainable growth.

MARKET CONDITIONS

Individual stocks are influenced by the direction of the broader market as more and more investors trade index ETFs and base buy/sell decisions on general market trend. And, market action alone can influence overall business sentiment. Therefore, I favor exposure to companies which are outperforming the general market.

ANALYSTS

Changes in research ratings and price targets serve as catalysts for stock movement. Analysts tend to be reactive and are forced to adjust with the stock price. Therefore, I favor companies with analyst price targets and ratings which need to be adjusted higher to catch up with stock action.

RELATIVE STRENGTH

Success begets success. Investors like industry leading growth, products, market share, and margins. Investors also gravitate toward stocks which are showing relative outperformance. Therefore, I favor leaders on both a fundamental and technical level.

SHARES OUTSTANDING

Stock buybacks and secondary offerings change the outstanding shares and therefore influence per share profit. They also tell you how management views the share price. Therefore, I favor companies which are buying back shares in the open market.

INSIDER ACTIVITY

Insiders have a fairly sophisticated read on a company’s internal operations, industry position, outlook and valuation. Therefore, I favor companies with insiders purchasing shares on the open market.

ACQUISITIONS

Acquisitions are complicated, distracting and expensive. They can elevate a company to new levels or merely add size and complexity. Therefore, I favor strategic acquisitions which are accretive to the bottom line.