Our Top Stocks with Predictive Metrics + Cheatsheet
ValueRay simplifies stock selection ✓ Quickly identify high-potential stocks using proven predictive metrics and make better investment decisions.
Top Stocks - selected by GARP Metrics and Peer-Group Analyses
| Symbol | Market Cap | VRT | Buy Signal | RS (IBD) | Risk | Comb. SUE | Revisions |
|---|---|---|---|---|---|---|---|
| MU NASDAQ Micron Technology |
509B | 83 | 1.54 | 99 | 97 | 7.81 | +67% |
| GOLF NYSE Acushnet Holdings |
5.43B | 77 | 1.84 | 85 | 92 | 4.03 | +100% |
| ACT XETRA AlzChem |
1.88B | 75 | -0.66 | 87 | 98 | 2.37 | +0% |
| TSM NYSE Taiwan Semiconductor |
1,742B | 73 | 0.72 | 89 | 78 | 3.89 | +100% |
| FSM NYSE Fortuna Silver Mines |
3.53B | 73 | 0.62 | 90 | 97 | 3.67 | +100% |
| TCMD NASDAQ Tactile Systems Technology |
633M | 69 | 1.61 | 97 | 85 | 3.25 | -100% |
| VIRI PA Viridien |
1.03B | 68 | 1.01 | 97 | 91 | 4.19 | +0% |
| MRK NYSE Merck |
271B | 66 | 0.87 | 82 | 94 | 3.85 | -60% |
| LGND NASDAQ Ligand Pharmaceuticals |
3.96B | 65 | -0.38 | 86 | 84 | 1.83 | +100% |
How We Filter
Valuation
- Forward P/E: 5 – 30
- RS (IBD) Rating >= 80
Qualit & Risk
- VR Total Rating > 60
- Altman-Z'' > 1.5
- Beneish-M < -2.1
Peer-Group Rankings
- ROIC > 50th pctl.
- Gross Margin > 50th pctl.
- EPS + Revenue SUE > 1.5
Approach: High-quality industry leaders with strong momentum that beat earnings expectations – combining with fundamental strength, peer outperformance → Expecting a Post-Earnings Announcement Drift.
Make money by not losing it
- Risk Management: Take the opposite position and evaluate the risks, not just the chances (Stop Loss, Opportunity Costs, Overbought).
- Highest-Quality only: Choose stocks so valuable, that you'd happily pass them on to your children.
- Rigorous Selection: If you could buy every year only one stock, would you still buy it?
The Four Principles of Profitable Investing
1. Economic Moat
- High customer switching cost or effort.
- Unbeatable Prices.
- Intangible Assets (Patents, Trademarks, Copyrights, Approvals, Brand Names, Geographic Advantage).
- Network Effect (Being the first mover -> Winner takes it all = legal Monopolists).
2. Buy at Fair Value or below
- What is a low valuation for this company? (Historical P/E, P/B and P/S over the last 10 Years).
- Discounted Cash-Flow Valuation (with a Margin of Safety).
3. Let it Compound
- Avoid Trading (Commissions, Taxes, you WILL miss the best spots anyways by 10%).
4. Know when to sell
- Realizing it was a mistake to buy it at the first place.
- The stock became wildly overvalued (P/E Forward, PEG in the 90+ percentile of its peer group).
- The company's moat has been destroyed or fundamentals are deteriorating.
- You need the money to buy a house for your family (Do it, always invest in inner peace and lifestyle).
Generic Screener Recommendations
- Average Volume > 250,000 (> 1,000,000 for Options-Trading)
When you're looking at stocks, it's a good idea to check if they have more than 250,000 shares traded on average each day. This usually means a smaller spread, making it quicker for you to buy or sell when you need to. - Market Cap > $500 Million (> $5,000 Million for Options-Trading)
Avoid Nano Cap stocks, this helps to reduce the risk of share price manipulation. - Price > $7
Avoid penny stocks, they often come with information problems and a high risk of being manipulated. - Age > 2 years
For solid research, make sure you have access to at least two fiscal years or 8 quarters of key financial data: balance sheets, income statements and cash flow reports.
Recommended Fundamental Ratios
Profitability
- ROIC > 15%
Look for companies with an ROIC greater than 15% for a more profitable investment choice. - Net Profit Margin > 20%
Net Profit Margin is a good indicator of how profitable a company is at the most fundamental level. Compare it to the industry average to see how well the company is doing. - FCF Margin > 7%
Free cash flow is the amount of cash a company has left over after it pays for its operating expenses and capital expenditures. FCF margin is how much free cash a company generates relative to its revenue.
Growth
- Revenue Growth > 10% YoY
Key Driver of Long-Term Stock Performance. - EPS Growth > 10% YoY
Leads to higher stock prices, hence most investors use Discounted Cash Flow (DCF) to value stocks.
Debt
- Net Debt / EBITDA < 3
- Net Debt / Free-Cash-Flow < 4
- Debt / Equity < 80%
- RoIC > WACC
How to identify the best stocks to buy by analyzing the earning sheets?
Business
- Low volatility of margins
Historically, gross margins should be stable and predictable - Pricing power
High gross margins > 30% - Low Capital Intensity
CAPEX/Sales < 5% and CAPEX/Operational Cash Flow < 15%
- Skin in the Game
Owner & Family > 20% of shares (as example the Lundin Family owns a high amount of the shares and always wins the vote)
How to identify Best Stocks to Buy by comparing financial ratios?
Business
- Moat
Sustainable, high Return on Invested Capital (ROIC > WACC) with recurring revenues, high gross margins and low capital intensity - Pricing Power
Best CAPEX/Sales in Peer-Group
- Reinvest for organic growth (ROIC > 20%, historically stable)
- Acquisitions (hard to predict which M&A creates value; 60%-90% don't)
- Share buybacks (better than dividends)
- Dividends 20% - 35% of EPS (only in absence of value creating alternatives)
How to Analyze a Stock
Understand the Product
- Annual Reports
- Investor Presentations, Shareholder Letters
- In which different segments does the company make money (Reliance on one product or group of customer?)
- How does the geographical split look like (Geopolitical Risks?)
- There are 1,000 resons to sell a stock, but only ONE to buy. So, which Insiders are buy/holding their stocks?
- Check ROIC curve of the last 3-5 Years, the more stable the higher the Moat. No competition = legal monopoly.
- CAPEX/Sales < 5%
- CAPEX/Operating Cash Flow < 15%
- Interest Coverage Ratio (EBIT/Interest payments) > 10
- Net Debt / Free Cash Flow < 4
- Gross Margin > 30
- FCF Margin > 20 (highly depends on the industry)
- Yearly Revenue Growth > 5%
- Yearly Earnings Growth > 7%
- Secular trend (urbanization, aging, cybersecurity, obesity, digital payments, …)