(Recorded on 09/21/21) Topics covered on this video coaching call In this special video update, trading coach Jerry Robinson discusses the unfolding Evergrande debt situation, the U.S. debt ceiling debate, this week’s Fed meeting, and more. Included in this video:...
Our Profit Trakker software hits the nail right on the head when it comes to buy and sell signals on stocks. Our trading system has a proven track record and hundreds of individuals just like you who have shared their success stories.
Here are just a couple of examples…
“I have subscribed to many trading services over the years but your charting system is the best one I have found yet!”Travis M.
Just take a look at the below chart of the Gold Miners ETF (Ticker: GDX).
As soon as the Tripwire, Trigger, and Confirmation gave us the buy signal, we bought and earned a 13% profit within a matter of days. And check out the Silver Miners ETF (Ticker: SIL) below.
As with GDX, as soon as the Tripwire, Trigger, and Confirmation gave us the buy signal, we bought SIL and earned over 17% within a matter of days.
As amazing as the Profit Trakker software is on its own, it does not give us the final answer for generating spectacular profits.
Don’t misunderstand: The Tripwire, Trigger, and Confirmation are essential ingredients in the recipe for consistent profits. But there is another input that is also vital: high-quality stocks.
Think of our Profit Trakker software like an expert home builder. The home builder can draw up a beautiful blueprint and execute it with precision. But if the builder does not have high-quality inputs like lumber, hardware, tools, and skilled craftsmen to do the actual work, the job will implode and will likely be a huge disappointment to the buyer.
Our trading software works in much the same way. It’s like the expert builder that, with high-quality inputs, can create beautiful results. The software achieves optimal trading results when paired with high-quality stocks.
In fact, it is nearly dead-on in predicting when a high-quality stock will enter a profitable uptrend.
How can a trader know which stocks to put into the software in order to get consistent, profitable results?
There are multiple paths a trader can take in order to find high quality stocks, but we have discovered a little-known indicator called the F-score that has a proven track record of revealing stocks poised to rise.
If you have never heard of the F-score, don’t worry. It was created back in 2000 by an accounting professor named Joseph Piotroski.
Piotroski, who shuns publicity and rarely gives interviews, was virtually unheard of until a 2008 report from the American Association of Individual Investors revealed that his unique approach to stock picking was the only method out of the 56 they tested that had positive returns in 2008. So what is Piotroski’s approach to stock picking?
As I mentioned, it’s called the F-score. The F-score is a metric based on financial statement data, and it has a track record of revealing stocks poised to rise in value.
It uncovers fundamentally sound companies by giving a one-point score for each of the following nine attributes:
- Positive return on assets for the current year
- Operating cash flow is positive
- A rise in return on assets
- Operating cash flow is greater than net income (this measures the quality of the company’s earnings)
- A decrease in debt funding (also known as leverage)
- An increase in short-term liquidity
- The company has not diluted the value of its stock by issuing more shares to fund the company’s activities
- An increase in gross margin
- The company is converting its assets into revenue at a quicker pace than last year
A company’s F-score can range from 0 to 9, with 9 signifying the strongest companies and 0 the weakest. In order to select the highest quality stocks, we like to stick with value stocks that have an F-score of 8 or 9.
How has the F-score approach to picking stocks actually performed over the years?
According to Piotroski’s 20-year study from 1976 to 1996, if you would have bought the strong companies (F-score of 8-9) and shorted the weak companies (F-score of 0-2), you would have earned an average of 23% per year, substantially outperforming the overall market return of 15.8% over the same period.
As fantastic as that sounds, the F-score approach is even more precise and profitable in recent years. In fact, think back to the market turmoil in 2008…
Had you been using the F-score, your portfolio would have risen when everyone else’s dropped like a rock. In 2008, the S&P 500 fell 43% while the high quality F-score stocks rose on average 32.6%.
Equally impressive is what the F-score can predict about weak firms. From 1976-1996, stocks with an F-score of 0-2 were five times more likely to wind up bankrupt or to delist from the stock exchange due to financial problems.
How do you find high-quality stocks that score an 8 or 9 on the F-score scale?
FTMDaily has built a custom program that screens for stocks that currently have an F-score of 8 or greater.
We are now releasing this list of stocks to subscribers. It is called the High Caliber Stock Watch List, and subscribers now have access to it 24/7.
Remember that the F-score is a rigorous financial litmus test, and very few stocks will score an 8 or 9.
We only want the highest quality stocks, so we are screening out all the under-performers and providing you with those stocks that make the cut.
The High Caliber Stock Watch List will typically have 5-10 stocks on it at any given time.
The best way to use this watch list is to pair it with our Profit Trakker software, which will give you the precise entry and exit signals for these stocks. This new watch list for subscribers will be updated weekly with stocks that rank 8 or greater for the F-score.
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Featured image courtesy of: NicoElNino / Shutterstock