The Timely 10
Whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or are fully invested and merely in need of some affirmation and hand holding, The Timely Ten represents our top-ten recommendations as of each issue. Short of utilizing the personal investment-management services of our sister company, IQ Trends Private Client Asset Management, this is as close to real time advice as you can get.
Traditionally our investment considerations begin with the following screen:
- Stocks in the Undervalued category
- An S&P Quality Ranking of A- or better
- A “G” designation for outstanding long-term average annual dividend growth of 10% over the last twelve years
- A price/earnings ratio (P/E) of 15 or less
- A payout ratio (percentage of earnings paid out as a dividend) of 50% or less (75% for Utilities)
- Long-term debt-to-equity of 50% or less (75% for Utilities)
For The Timely Ten we also include the following metrics in our considerations:
- Return on Invested Capital (ROIC) of 10% or greater
- Free Cash Flow Yield (FCFY) of 5% or greater
- A proprietary Price to Value Ratio (PVR) between 0 and 1.6 where the lower the number the better
- Technical characteristics on the daily and weekly charts that suggests the potential for imminent capital appreciation.
The Timely Ten can be found in each issue. The format is easy to follow as can be seen in the sample below.
As stated previously, Investment Quality Trends provides information targeted towards subscribers with varying levels of portfolio building expertise. Unlike many other newsletters we do not construct and maintain model portfolios. Because we follow such a wide variety of companies that are dynamically moving in price, along with a steady influx of new subscribers, such an approach would be impractical for our particular application.
For performance tracking purposes, however, The Hulbert Financial Digest has maintained a portfolio for Investment Quality Trends since 1986. This portfolio consists of all the companies in the Undervalued and Rising Trend categories, which, at any given time, could total as many as one hundred companies or more; clearly too large a number to be practical.