Our popular ‘Stock Ideas’ section, one of our web site’s most popular features with our subscribers, is, we suspect, about to become even more popular. After hearing back from many of our subscribers who have requested an expansion of this section to include more pre-filtered lists of stocks based on myriad search criteria, we have embarked on a complete revamp of our Stock Ideas section, the first part of which was released on Friday along with our new ‘Company Profile’ page. The two new Stock Ideas sub-sections rolled out last week are only the first step in our roll-out of an entirely new set of lists devoted to helping you find the best stocks in MarketGrader.com based on your own preferences or investment style. Since last Friday subscribers clicking on the ‘Stock Ideas’ link in the StockGrader section of our site will notice two new sections: ‘New Income Ideas’ and ‘New Sentiment Ideas.’ In addition to providing you with brand new lists of stocks with these two sections we’re also introducing our new user interface design, which will be used going forward in this section of our web site.
New Stock Ideas Interface
This week we’re introducing a new way for our subscribers to scroll through any of our ‘Stock Ideas’ called ‘Mosaic View,’ which will be available for all lists in this section of our web site in addition to our traditional ‘List View.’ Starting with the two new sections we launched on Friday, subscribers that go to any of our new stock ideas sections will now land on a snapshot page highlighting the first stock in the list, which appears underneath a new horizontal scroll bar that will display all stocks in the list from left to right. Our goal with this new ‘mosaic view’ is to allow you to see, without leaving the stock ideas section of the site, the actual criteria and data points used in selecting every company to any particular list. The navigation bar above the company’s snapshot allows you to scroll across the list without leaving the page or hiding the stock currently selected. By simply clicking on any of the ‘mosaic tiles’ on the scroll bar you may change the snapshot below it. On the page’s left hand side you may see all the idea lists in each sub-category (such as Sentiment Ideas or Income Ideas) with a brief description of each one. Clicking on any of the lists on the left margin will populate the rest of the page. And when you want to see the entire list of stocks from top to bottom all you have to do is click on the ‘List View’ tab in the upper right hand corner of the page for a traditional view of the entire list.
New Sentiment Ideas
The first new group of lists we would like to introduce to our subscribers in our expanded ‘Stock Ideas’ section is based on our Sentiment indicator. The purpose of these three new lists is to help you identify stocks with improving or declining investor sentiment in anticipation of possible short-term price movements.
1. Improving Sentiment
This is a list of the 100 stocks in MarketGrader.com with the biggest jump in positive momentum based on changes to our Sentiment indicator in the last four weeks. Our Sentiment indicator, designed to complement our traditional Fundamental Analysis, measures overall investor and market sentiment for a company’s shares irrespective of the company’s financial performance. It is comprised of four individual indicators: Price Trend, based on a MACD analysis; Price Momentum, based on a relative price strength analysis; Earnings Guidance, which tracks the rate at which companies and the analysts that follow them change their annual EPS forecast over time; and Short Interest, which tracks the monthly changes in the number of shares sold short relative to the company’s public float. The combination of these four indicators, which result in our 0-10 Sentiment score, helps MarketGrader.com subscribers identify opportunities among stocks that seem to be in favor with investors and that may be climbing as a result of a quantitative story (acquisition, product launch, etc.) not tracked or quantifiable by our traditional fundamental analysis. However, all companies in this list must have an overall ‘Buy’ or ‘Hold’ rating. The list is ranked, from top to bottom, based on the magnitude of the increase in each stock’s Sentiment score in the last four weeks.
2. Declining Sentiment
This list with the 100 stocks in MarketGrader.com with the biggest drop in Sentiment is, essentially, the opposite of our ‘Improving Sentiment’ list. It measures drops in our 0-10 Sentiment score in the last four weeks irrespective of company fundamentals. These are usually stocks that investors want to be careful with as they are either out of favor at the moment or in the process of falling out of favor with investors. The list is particularly helpful in helping investors avoid companies with high fundamental grades whose stocks are in decline, particularly if they’re concerned about their short-term performance.
3. Speculative Plays
Like our ‘Improving Sentiment’ list, this one is based on stocks with significant increases in investor sentiment over the last four weeks; however, unlike the aforementioned list, stocks in this selection are all rated ‘Sell’ based on MarketGrader.com’s fundamental analysis. This leads us to believe that the reasons why these stocks’ Sentiment is improving have little to do with the companies’ financial performance and more to do with investor expectations of upward movement in their shares as a result of a qualitative story that might not have played our entirely in the market. This would help explain why, for example, the current list contains plenty of homebuilders, banks, financials, publishers and generally companies in industries with poor overall fundamentals. This is an interesting list for investors willing to do some qualitative research looking to uncover the story behind some of these jumps in Sentiment and get ahead of a potentially lucrative rise in the stock. However, caution is required as these are, after all, speculative plays.