When you have a new investment idea about a stock, you want the quickest way to know whether this stock has a high quality and growth potential. Just type its stock ticker at ClariStock and click enter. We now provide a 1-page summary for the top 5,000 US stocks in terms of market cap. Click our stock ticker list to see the top 5000 US stocks in terms of market capitalization, you can use “ctrl + F” to search the company name, then you can find the relevant stock ticker besides the company name on this page. You can type the stock ticker at ClariStock and click enter to search.
ClariStock will display a 1-page summary of your chosen stock. For efficiency and saving your time, ClariStock just shows the most VALUABLE information only as “Less Is More”. All of this information is relevant for you to make an equity investment decision.
The top row shows the basic information of that stock. In the middle section, the left-hand side shows the most critical information from us, the total mark. Above 70 is preferred. The total mark is an overall score to indicate the stock’s overall comprehensive strength, including its growth potential, profitability, financial strength and historical result performance.
Apart from the total mark, you may also be curious where is the total mark from. What is the rationale behind calculating the total mark? Thus we provide a further breakdown of the total mark composition. It is composited from various scores of the right-hand side section, including growth potential, profitability, financial strength, the performance of the past three years.
Here is a detailed explanation of various scores of different sections.
As being a high quality growth stock, we think the most important criterion is its growth potential. For quantifying its growth potential, we take the market estimation of its revenue and profit growth in the current year and next year to calculate the score of growth potential. A higher score is preferred to indicate it has high growth potential with high estimated revenue and profit growth.
This criterion focuses more on the profit generated from the sales. we take the gross profit margin, net profit margin, ROE, etc to quantify the profitability score. Warren Buffett emphasizes a lot on ROE which is an important indicator to reflect return from shareholder’s capital. A higher score is preferred to indicate a high profitability, implying strong pricing and earnings quality.
This criterion focuses more on the health of its balance sheet and cash flow. To quantify the financial strength, we take the debt ratio, operating cash flow to net profit, free cash flow to sales, etc to calculate the financial strength score. A higher score is preferred to indicate it has strong financial strength with a healthy balance sheet and cash flow, meaning a lower risk of bankruptcy during an economic crisis.
Due to the special accounting treatment of balance sheet in the financial industry, for example, customer deposits may be booked as liability first, financial strength score is not applicable on stocks located in the financial industry.
Past 3-years annual result performance
A good quality growth stock needs to have a good and consistent earnings history of supporting as Warren Buffett emphasizes the importance of historical good earnings records. We also use the same criteria of the three indicators, growth, profitability and financial strength. We apply the same standards and quantifying the past 3-years annual results, e.g., did the company have high revenue and profit growth, high margin, high ROE, good cash flow, low debt ratio, etc. A higher score is preferred to indicate it has a solid annual result to support.
That’s all. Only 7 key criteria to give you a big picture of a stock that enables you to understand the stock quickly within just one minute! This shows whether this stock is worth you spending extra time to do further analysis. Again we emphasize the importance of efficiency and how we can save your time to analyze a stock.
In the bottom left corner, we provide the market estimation of revenue growth, profit growth and ROE in the current and next year. We think these numbers are the most fundamental to give you a sense of its future growth potential and profitability. Higher numbers are preferred.
For the forward-looking purpose, we provide estimated PE valuation, not historical PE. As we look for high quality growth stocks, forward valuation is more meaningful. Forward valuation (P/E) is defined as the current share price divided by estimated earnings per share (not historical earnings per share). For example, 21 P/E means current share price divided by estimated 21 earnings per share. 22 P/E means current share price divided by estimated 22 earnings per share.
Estimated P/E is preferred lower. However, you should not only look at estimated P/E alone without comparing it to estimated EPS growth. Just like Peter Lynch did, normally, the stock may be undervalued when estimated earnings growth exceeds the estimated P/E. The stock may be expensive when estimated earnings growth is lower than estimated P/E. For example, a stock has an estimated 2021 P/E of 25 times, however, the stock is estimated to deliver an EPS growth of 30% in 2021, this stock may not be treated as expensive.
Microsoft (MSFT), Facebook (FB) and Alphabet (GOOGL)are very good examples to illustrate this relationship, P/E of them are always “expensive”, but when you compare them to their estimated EPS growth respectively, they do not seem expensive.
A stock recommendation list will be provided and updated regularly. First, ClariStock will collect millions of financial and operating data, including the historical revenue, margin, profit growth, ROE, estimated revenue and profit growth, debt ratio, etc. Second, ClariStock will use its algorithm to quantify the stocks and assign a total mark and scores of various fields such as growth potential, profitability, financial strength and historical annual result performance.
Our algorithm has already been proved by the robust backtesting result that it can consistently generate a high return and beat the index in the long run (5 – 10 years). Backtesting result showed our algorithm has generated a total 2006-2020 return of 655%, outperforming the S&P500 index by 449% at the same period!
Our recommendation list consists of the top 20 stocks in terms of the total mark. A higher total mark is preferred, which indicated this stock has a higher growth potential (high revenue growth), profitability (high margin), strong financial health (low debt ratio) and support of good historical results. These stocks belong to the category of high quality growth stocks and may give you a high return in the future.
Risk Management and Portfolio Diversification
Return is important, but how to reduce your risk is also critical. For being an intelligent investor and advocated by many investment gurus, establish a portfolio is necessary and it is a simple way to reduce the overall risk and volatility.
Don’t Put All Your Eggs in One Basket
We recommend establishing an equity portfolio for investing in at least 10-20 high quality growth stocks. If you do not know how to find a quality growth stock, please read our recommendation list or just simply type the stock ticker at ClariStock. Read its total mark and scores of other financial metrics(growth potential, profitability).
If you have time, we also encourage you to do your own qualitative analysis. (ClariStock has already helped you to do the part of the quantitative analysis). Screen out the stocks that do not have strong qualitative metrics such as does it have a wide moat, differentiated product, disruptive technology, capable management team, etc.
For more details about the backtesting result, please read https://claristock.com/blog/backtest-data-to-support/
Disclaimer: We are not financial advisors. This is just for educational purposes only. For more details, please read our Terms of Service.