It is our pleasure to introduce our new “Monthly Picks” series. This series consists of monthly published articles that will be featured in our newsletter. Here, we highlight 3 stocks that ranked high in our monthly forecast report.
Our model that generates these forecast reports evaluates and rates our selection of 100 US companies. Most of them are the largest by market capitalization and form part of the S&P 100 index. The higher the overall score a company gets, the higher it is listed in the forecast report. A high score indicates that the company should outperform the market in the long run.
Our goal is to present how our stock prediction model works under the hood and also show some results it generates. We will look at one indicator for each stock that showed very high or low values compared to other rated stocks. We will also explain what this indicator is telling us.
The prediction model consists of many different indicators, and each of them has a particular weight. Therefore, the values of some indicators will affect the overall score more than the values of others. Also, the total number of these indicators and their weight fluctuate, and that is because the prediction model is continuously modified to achieve the best risk-adjusted results.
We will also bring you the latest market news regarding these highlighted stocks.
Let’s have a look at this month’s picks that ranked in the top of the 20 most undervalued stocks according to our monthly report for February (predictions from 01/02/2022 to 28/02/2022).
NIKE, Inc. (NKE) – Its price to cash flow (P/CF) ratio has changed for the better in the last 126 days. It was the biggest positive change from all measured stocks. P/CF indicator compares the current market capitalization of a company to how much cash the company is generating. In general, the lower the P/CF ratio a company has, the more undervalued it is. This indicator currently has an average weight among other indicators in our prediction model.
Netflix, Inc. (NFLX) – Its price to tangible book value shows very good numbers as compared to its values in the last 252 days. Price to tangible book value (PTBV) compares the company’s market capitalization to all of its assets minus intangible assets (intellectual property, goodwill) and liabilities. Stocks that have a lower PTBV ratio are viewed as better buying opportunities than those with high PTBV. This indicator currently has the highest weight in our model among all the indicators.
Caterpillar Inc. (CAT) – Its commodity channel index (CCI) is showing very low readings. CCI is a technical indicator that compares an asset’s current price to its historical average price. It is used to determine reversals in price, trend strength, and price extremes. When the readings reach below – 100, the asset enters an “oversold” territory suggesting a good opportunity for purchase. This indicator currently has a relatively high weight in our model.