Investment Research Stock and Fund Ratings

Investment Research Stock and Fund Ratings

Last Updated by WikiWealth

Short Term Potential

Quantitative research, 0 to 1 year

Overall Methodology
Short Term Analysis Overview
Discounted Cash Flow Analysis
Investing Multiple Analysis
Warren Buffett Analysis
WACC Analysis

WikiWeath's short term analysis focuses on three exclusively quantitative (mathematical) approaches to find the fair value of a target company. The fair value indicates whether you should buy, sell or hold your target company. If the stock price is below the fair value by a significant margin, then an investor should buy; if the opposite is true, then an investor should consider selling.

Buy Low; Sell High

Long Term Potential

Qualitative Research, 1 to 20 years

Overall Methodology
Long Term Analysis Overview
Investment Questions Help
SWOT Analysis Definition
Investment Indicators
Impact Analysis

WikiWeath's long term analysis focuses on a collection of important investor questions, which help to identify the intuitive value of a target company. These questions focused solely on the variables Warren Buffett finds important in his investments, so they may not find every undervalued company, but they will guide an investor towards the best companies with the least risk. A major element of this approach is the SWOT Analysis.

Detailed Stock Rating Explanations

Short Term Stock Ratings: Wikiwealth uses a safety margin of 50%, which means that the fair value of a stock has to be 50% higher (sell) or 50% lower (buy) than the current stock price to obtain a BUY or SELL rating.

  • Buy: the stock is at a fair price to purchase. Safety margin is greater than 50%.
  • Hold: the stock should not be bought or sold. Just hold the investment, because it is at fair value.
  • Sell: the stock price is high, so an investor should consider selling. Safety margin is 50% below the market price.
  • Time Horizon: Short term potential is generally considered to be less than one year; however, a stock price may not reach a short term price target. Investors control share prices by buying and selling a stock at a given price. Investor emotions drive stock prices over the short term. It is best to buy companies with a short term potential to increase in price.
  • All approaches have a long-term view of stock prices. The longer your time horizon, the greater the chance that prices approach their fair value per share. Overvalued stock may stay overvalued for many years before suddenly and sharply dropping in price at the hint of bad news; the opposite is true for undervalue stocks. Some short term approaches judge a stock's value in relation to their competitors, so as a group of stocks increase in value, their relative value to this group may stay the same.

Long Term Stock Ratings: Long term ratings are a common sense approach to investing. They measure the potential of an investment and how likely the company can reach their potential based on their unique characteristics. It is difficult to measure the success of a brand name or workforce intelligence in mathematical terms, so these and many other variables are incorporated into this rating. The overall ratings for the qualitative analysis are a result of user input with professional guidance. Users have a direct impact on the value of a firm, because they buy and sell a firm's good and services. This first hand experience allows the consumer / investor to give their unbiased assessment of the qualities of a firm. High ratings on the investment questions will result in a buy rating for the investment. Low marks by consumer / investors will result in a sell rating for the stocks value.

  • Buy: 4 or more average stars.
  • Hold: between 2 and 4 average stars.
  • Sell: 2 or less average stars.
  • Time Horizon: Long term potential is generally considered to be between 1 and 20 years. There is no price target for long term potential, because it is impossible to predict. Who can predict what Apple product will drive sales in 10 years? Long term potential is not quantifiable; however, strong long term potential means that a company's target stock price will increase each year.

How to Interpret The Target Price: Investment research is not an exact science. Thousands of inputs go into every single analysis, so to predict an exact investment's price is impossible. When prices are wildly different from their target price, they have a strong tendency to revert back to the target. It is like have a rubber band tied to the target price. Over time, prices also revert back to the target.

Detailed ETF / Mutual Fund Explanations

ETF and Mutual Fund Ratings Explained

Short Term Fund Ratings: WikiWealth does a weighted average of the quantitative analysis conclusions for each stock that comprise of the fund. If only two stocks comprise of a portfolio, then the fund rating is the average of those two stocks. WikiWealth takes into account the industry allocation and other statistics that go into the fund rating. This rating updates multiple times a day.

  • Buy: the fund is at a fair price to purchase. Safety margin is greater than 50%.
  • Hold: the fund should not be bought or sold. Just hold the fund, because the weighted average of the individual investments is a hold.
  • Sell: the fund price is high, so an investor should consider selling the fund. Safety margin is 50% below the market price.

Long Term Fund Ratings: Long Term Ratings: WikiWealth does a weighted average SWOT analysis of a fund’s investments. We simply add up each company’s SWOT analysis and apply a formula that determines whether that fund is a buy, sell, or hold. When strengths and opportunities exceed weaknesses and threats, an investment has great long term potential. The degree of that potential determines the fund’s rating. A translation of fund ratings go as follows:

  • Buy: This group of companies may out-perform the stock market.
  • Hold: This group of stocks may perform in line with the general stock market.
  • Sell: This group may under perform the general stock market.

Overall Conclusion: The best investments to buy have a long term and short term buy rating.