Stock Ratings – How do we calculate “best stock” picks?

We compared factors including performance data, dividends and revenue figures to help you narrow down your choices.

Important note

There’s no single share that’s best for all investors as all our needs are different – and what’s best for you might not be best for someone else. No-one can say for certain which direction stocks will go; these are investment ideas only and should not be taken as financial advice.

Finder’s stock ratings are calculated using our proprietary algorithm which takes into account a variety of factors to determine whether a stock could be suitable to buy. The selection criteria is based on internal and external factors that might affect the price of the stock moving forward.

How is the rating determined?

For a stock to be included on our ratings list, it must have been listed on the New York Stock Exchange or the Nasdaq for a minimum of five years, while also having a minimum market cap of $10 billion. After meeting these initial criteria, each stock is given a set number of points depending on how it performs in each of the categories below.

Which factors contribute to the final score?

Our stocks are rated depending on price performance over periods of one month to five years, volatility levels, revenue growth, profit margins and dividends. This is how we measured each factor:

Category: 1-year stock price performance

Weighting: 24%

Method: More points are given to companies where stock prices have risen over the last 12 months and no points are assigned to stocks where prices are lower today than they were 12 months ago.


Category: 5-year stock price performance

Weighting: 15%

Method: We assign more points to stocks where prices have risen over the last 5 years and no points to stocks where prices are lower today than they were 5 years ago.


Category: Volatility

Weighting: 7%

Method: We assign more points to stocks with betas that are closer in range to beta 1 and fewer points to stocks with greater variance.


Category: Growth days over the last month

Weighting: 10%

Method: Stocks with a higher percentage of price growth days versus price fall days over the last 30 days are assigned more points.


Category: Revenue growth

Weighting: 20%

Method: Companies with higher quarterly revenue growth (year on year) are assigned more points.


Category: Profit margin

Weighting: 17%

Method: More points are assigned to companies with a higher profit margin and no points are given where there is zero profit margin or less.


Category: Dividends

Weighting: 7%

Method: Extra points are assigned to a company if it has paid a dividend at least once in the last 12 months.


Calculation

The above criteria allows for a max score of 41. That score is then turned into a rating score out of 100 to produce a rating.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

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Associate editor

Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio

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