Fundamentals
Quarterly Earnings
Earnings growth is the first factor as it is the most important. Looking for companies with a minimum of 25% earnings-per-share growth over the previous quarter.
Annual Earnings
While one or two quarters can be a promising signal, what the strategy looks for as well is a minimum of 25% annual earnings-per-share.
Innovation
New products and services are often what drive a companies earnings-per-share growth. This could also happen when a company comes under new management or reinvents themselves.
Technical Analysis
Heavy Volume
A heavy volume of share purchases from large institutions is another key driver. Mutual funds and institutions make up a heavy percentage of trading volume, so looking for large increases in daily trading volume is important.
Top Of The Class
The best of the best companies are considered leaders. Looking for the top-performing stocks in the top industries is important while avoiding the companies that are not innovating with new products/services or attracting heavy institutional trading volume.
Institutional Sponsorship
Large mutual funds, banks, and other institutional investors have massive teams that dedicate countless hours to research and figuring out what they will be attracted to. An increase in the number of mutual funds owning a stock is a key element of the strategy.
Market Direction
Three out of four stocks move in the same direction as the general market. Being in at the right time is as important as being in the right place. Looking for the market to be in an uptrend is an important factor in the strategy.
