OUR METHODOLOGY
Identifying growth compounders at a reasonable price
We empower you to find the companies most likely to help you accumulate lasting wealth by analyzing 41,000+ stocks daily across all global markets.
Our GARP (growth-at-a-reasonable-price) plus Quality framework, based on 24 fundamental indicators, ensures that only the best companies make our BUY-rated list.
Our time-tested and
rigorous process
Our process begins by meticulously collecting and screening the financial statements of all publicly traded global companies that offer dependable and consistent reports.
Rigorously sifting through millions of data records, we pinpoint reporting anomalies and inconsistencies, and discard unreliable ones.
We calculate a range of metrics that take into account differences in industries and sectors to find sustainable growth compounders, prioritizing consistent growth, sustainable profitability, sound capital allocation, and reasonable valuations.
We calculate and grade daily 24 unique fundamental indicators across our Growth, Value, Profitability, and Cash Flow categories. While our indicators vary by industry to cover diverse business models, our focus on GARP + Quality does not, irrespective of company size or domicile.
We aggregate our fundamental indicators into a final numerical score between 0 and 100, from which our final buy, hold, or sell rating is derived. On average only 14% of all companies we have covered globally for over 20 years have been rated buy.
Our standardized ratings allow us to compare stocks from all over the world to help you find the very best. We curate them for you in 30+ unique idea lists updated daily. We also publish 80+ indexes based exclusively on our ratings, which we license to asset managers and wealth managers.
GARP + QUALITY
Our proprietary rating system
MarketGrader uses a GARP (Growth-at-a-Reasonable-Price) +
Quality methodology based on 24 fundamental indicators to rate over 41,000+ companies globally. While several of our indicators vary based on industry or sector to account for differences in companies’ business models and accounting and reporting standards, the framework does not.
We always calculate and grade six indicators in each of our four fundamental categories.
Our Growth indicators measure revenue, operating income, net income and earnings per share growth in the short and long-term, and are designed to identify companies that are growing profitably and in a way that appears accretive to shareholder value. And while our indicators don’t penalize companies that are growing their sales rapidly at the expense of profits, they must demonstrate a clear path to sustainable growth where capital is allocated wisely.
Our value indicators measure a stock’s valuation relative to its sales, cash flow, operating income, net income, and book value. We measure valuation multiples in the context of the company’s business, and not based on static, absolute scales. Our goal is not to find outright cheap stocks, but rather companies that are trading at a reasonable price relative to their growth and the overall health of the business. This approach also helps us avoid value traps, or stocks that look like bargains but whose business is impaired or low quality.
Our profitability indicators measure whether a company’s margins–from gross to net profit margins–are expanding or contracting and whether the company’s profits appear sustainable. We pay particular attention to a company’s return on equity and capital efficiency to measure the quality of its business model and whether management is able to leverage its assets and capital base in a way that supports long-term shareholder returns.
Our cash flow indicators measure a company’s ability to generate free cash from its core operations and to generate returns on its investments that are well above its cost of capital. We pay particular attention to the company’s capital expenditures and its ability to use leverage to improve shareholder returns without impairing its future growth. Overall, our cash flow indicators are helpful in gauging management’s ability to run the business efficiently and profitably.
GARP + QUALITY
Our proprietary rating system
MarketGrader uses a GARP (Growth-at-a-Reasonable-Price) +
Quality methodology based on 24 fundamental indicators to rate over 41,000+ companies globally. While several of our indicators vary based on industry or sector to account for differences in companies’ business models and accounting and reporting standards, the framework does not.
We always calculate and grade six indicators in each of our four fundamental categories.
Our Growth indicators measure revenue, operating income, net income and earnings per share growth in the short and long-term, and are designed to identify companies that are growing profitably and in a way that appears accretive to shareholder value. And while our indicators don’t penalize companies that are growing their sales rapidly at the expense of profits, they must demonstrate a clear path to sustainable growth where capital is allocated wisely.
Our value indicators measure a stock’s valuation relative to its sales, cash flow, operating income, net income, and book value. We measure valuation multiples in the context of the company’s business, and not based on static, absolute scales. Our goal is not to find outright cheap stocks, but rather companies that are trading at a reasonable price relative to their growth and the overall health of the business. This approach also helps us avoid value traps, or stocks that look like bargains but whose business is impaired or low quality.
Our profitability indicators measure whether a company’s margins–from gross to net profit margins–are expanding or contracting and whether the company’s profits appear sustainable. We pay particular attention to a company’s return on equity and capital efficiency to measure the quality of its business model and whether management is able to leverage its assets and capital base in a way that supports long-term shareholder returns.
Our cash flow indicators measure a company’s ability to generate free cash from its core operations and to generate returns on its investments that are well above its cost of capital. We pay particular attention to the company’s capital expenditures and its ability to use leverage to improve shareholder returns without impairing its future growth. Overall, our cash flow indicators are helpful in gauging management’s ability to run the business efficiently and profitably.
TRACKING SENTIMENT
Navigate short term fluctuations with confidence
While we believe that fundamentals are the primary drivers of long-term shareholder returns, we also understand that investor sentiment influences share prices in the short term. We designed the MarketGrader Sentiment Analysis to help you navigate such fluctuations and to find immediate opportunities.
The Sentiment Score comprises four indicators designed to measure supply and demand dynamics that help predict stock behavior within a 30 to 60-day window. Each of the four indicators–Price Momentum, Price Trend, Relative Strength, and Earnings Guidance– is assigned a letter grade (A+ to F), which is then converted into a numerical value used to compute a score in a range between 0 and 10, resulting in our overall SentimentGrade.
What drives us
Equities represent the largest source of long-term capital appreciation and wealth accumulation in the world.
Companies that are the most consistent creators of economic value over long market cycles—we call them Growth Compounders—represent the best source of wealth creation in the form of shareholder value.
The best way to find and own these companies is through a systematic approach that rewards companies with superior–yet sustainable–growth, whose shares are priced reasonably.
In a world with unlimited sources of opinions and questionable analyses by experts, investors feel like they’re on a treadmill trying to keep up or catch up with others. MarketGrader is the way off the treadmill and onto a better path.
Achieve higher returns with smarter stock selection
MarketGrader’s time-tested, objective ratings on
41,000+ stocks.
