GeoInvesting Power Ranking: A Powerful Recipe to Enhance Portfolio Returns.
Market timing is not a core strategy of the GeoInvesting philosophy. However, attempting to identify individual stocks in the prime of their financial performance period is central to our investing approach.
When is the right time to own a particular stock? We often define this as a time when a company is about to enter the meat of an EPS growth cycle.
Through the use of analyst EPS estimates, we can create GeoPowerRankings (GPR) to help us identify opportunities like these. The GPR is the amount of consecutive quarters that a company is expected to experience EPS growth of around 30%*. The higher a stock’s GPR, the more timely and lucrative returns can be. From our experience, stocks with a minimum GPR of 3 or 4 can begin to offer lucrative and timely returns.
Some objectivity has to be allowed when choosing growth rates for GPR analysis. We are willing to look at quarterly growth rates of less than 30% if the majority of EPS growth in the targeted period is over 30% and especially if the PEG ratio is favorable. We also attempt to verify that forward EPS growth rate will be close to 30%.
Important note when using GPR for RTO China stocks:
Unfortunatly, fundamentals are not currently the motivating forces behind ChinaHybrids. Investors should treat GPR for this space with a grain of salt until the smoke clears and clarity is achieved on equity raise goals of prospective companies. The good news is that we can use GPR with a high degree of certainty for U.S. companies.