Growth Investing Screen
© Center for American Progress Action Fund
A popular growth investing screen is based on the concept of GARP, or growth at a reasonable price. This screen seeks to identify companies with long-term growth prospects that are in the early stages before they become "glamor stocks". T. Rowe Price originated this idea back in the 1930s.
He found success by departing from what was then conventional wisdom that all stocks were cyclical, arguing instead that most companies passed through stages of a life-cycle which were a predictable growth, maturity and decline. By looking for those companies just entering the growth phase of the cycle and holding them for a long time, he was able to realize superior returns. It's not that easy to screen mechanically for one of Rowe's main criteria, which is to look for companies where EPS is increasing at the peak of each successive major business cycle, in order to rule out non-growth cyclicals.
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Former Professor’s Value Investing Strategies
© epSos.de
A former accounting professor at the University of Chicago has become deeply involved in value investing strategies. In the course of his research, he noticed the fact that many stocks with very low price-to-book value were in terrible financial shape and unlikely to survive, thus deserving of their low valuation.
This observation led him to devise a system to filter these low price-to-book stock lists mechanically to weed out the ones that were unlikely to prosper and uncovering the hidden gems.His method is simple and easily duplicated. A stock is s cored by nine criteria that measure the company's performance over the past two years. The stock gets a "1" for each test it passes and a "0" for each test it doesn't. At the end all the scores are added to come up with the Piotroski score, where 9 is a perfect score. Back-testing has shown that stocks with low valuations and Piotroski scores of 8 or 9 vastly outperform the market.
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Go for value investing
© Lars Plougmann
Investment is something that you commit to in terms of money with the expectation of getting good returns in the future. Lots of long term investment opportunities like gold and silver, real estate, deposits in banks, share trading, etc are available for you to choose from.
A share market is considered to be one of the most effective ways to earn on your investment. Sometimes, there is a chance where the market overreacts and some high valued share is traded under their intrinsic value. This is when value investing is done. The value investor then buys the shares of such good companies at the lower rate and then trades it when the market goes up thus earning handsome amount on his investment. Generally value investors are always looking for stocks which are lower than their average booking price and have higher returns.
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