The stock market is the first aspect of The Market's Edge fundamental approach to investing. We generally search for stocks with the following characteristics:
- Recently hit a new 52-week high
- Low institutional ownership
- High insider ownership
- Small stock float
- Stock price under $25
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- Undervalued
- P/E ratio at half the EPS growth rate
- EPS growth rate over 25% and rising
- Companies seeking margin improvement
- Diversification across industries
- No established hold period
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After identifying such a stock, we perform a thorough bottom-up evaluation of the company's and management's performance and their future potential. Industry trends take a minor roll in our analysis. For stocks that we decide to purchase, a sell point is defined by comparing P/E ratio to growth rate.
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In the coming months we will be very active in bringing new technologies to the investor to help exploit growing opportunities in the marketplace. One of these will be the Market's Edge Market Monitor (MEMM), a Windows application that will help momentum investors exploit value in the marketplace in a timely fashion. Another will be a web-based vehicle to help explore international and specifically Chinese markets.
