Throughout the month we have been showcasing the QuantaFundaTechna process that we use for “scoring” stocks. This system is designed to identify the areas that are most often seen in stocks that have growth potential.
(See this link for a complete list of all of the stocks that we have already analyzed this month)
JP Morgan’s (JPM) “BUY” rating is primarily due to the recent trend higher in the T|SCORE. Due to to many other factors, this would not have qualified to be bought in our managed portfolios. In particular, the fundamentals are not there and several other metrics are below levels that we would like to see in a fundamentally strong name.
Horowitz & Company’s proprietary Technical Scoring System (T|score) takes into consideration both individual security technicals as well as the overall market direction when considering whether or not to purchase a company. H&C’s Market Trend Indicator (MTI) is a measure which is designed to evaluate the overall trend in the market. There are four designated levels to assess the trend which include: Strong Downtrend, Downtrend, Rally and Strong Rally. We are currently in an environment where the MTI is in a Rally. All of our indicators are showing that the markets are currently in a stable rally or have pulled back from a Strong Rally. Those with a moderate risk tolerance could begin to look for securities breaking out on their radar with medium to higher technical scores. With that said, this stock ranks in the mid to below average percentile of stocks from an individual security technical score. H&C would not consider purchasing this position in any general market with the exception of a Strong Rally. H&C would be hard pressed to purchase this position even in a Strong Rally considering all other companies that may score higher technically in our growth model.
Below are some of the areas where Jpmorgan Chase & Co (JPM) excelled or detracted from the value of the technical score:
Stochastics are currently showing some bullish attributes which may mean this stock has some room to run in the short run.
In terms of price and volume especially over a short period of time it is important to see if there is any weight behind either a rally or correction. This company has shown to have less than favorable price action in terms of volume and therefore has a greater chance to move lower if the overall market and economy are to trend lower. Higher volume with negative price also will provide resistance levels for this position if it were to increase back to these levels.
On a 12-month rolling period this company has not performed as well when comparing against its peers and equities in the S&P 1500. We see this as a negative sign for this company as it shows weakness relative to the overall market
H&C currently sees Jpmorgan Chase & Co (JPM) in a Short Term Uptrend and Long Term Uptrend.
Horowitz & Company’s proprietary Fundamental Scoring System (F|score) takes into consideration many factors related to each company’s financial history and outlook. This system is oriented toward a growth model and therefore will give a higher score to those companies which continually show increasing earnings per share and revenue over time. Over the long-run (and when looking to purchase a security) we prefer companies with a track record of growth and solid fundamentals. In the short-term however, it is price / technicals that pay. When investing, we combine both of these analyses to seek out possible investment opportunities within our universe of stocks.
This stock ranks below average in fundamentals and would not be considered an option that we would invest in the long-term. For those with a higher risk tolerance, it is possible to enter a speculative position with caution as this market has been much about bottom feeding on the worst of the worst companies. See below for details on where this company thrives and possibly some of the drawbacks:
We find that EPS Growth on a Quarter over Quarter basis is one of the strongest components when screening for growth stocks. Continued EPS Growth in a company generally shows strength in leadership, the ability to manage expenses and improve the bottom line.Over the last three quarters, this company has not done as well producing EPS Growth Rates last quarter, 2 quarters ago and 3 quarters ago -2.42%, 4.10%, 16.38% respectively.
Revenue Growth similar to EPS Growth is also a strong component to consider when screening and scoring for growth companies. Continued growth in revenue shows that the company is innovative, marketable and its products remain relevant in the marketplace.Over the last three quarters, this company has not done as well producing EPS Growth Rates last quarter, 2 quarters ago and 3 quarters ago 0.66%, 8.68%, -6.63% respectively.
The 5 Year EPS Growth Rate has added to the fundamental score with a value of 10.72
Last quarter this company reported Earnings Per Share 10.99% better than analysts had expected. We believe this surprise may be an anomaly.
Price relative to earnings growth is commonly referred to as the PEG Ratio. This company may contain added value as it’s PEG Ratio is 0.74. We generally would like to see the PEG ratio under 1.5 and it is even better if it is under 1.0. Value player will consider this cheap.
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