Baking with 11 Metrics
What stocks come out on top?
Since the start of the new year, we’ve been heavily focused on analyzing performance of stocks in 2021 versus popular fundamental ratios and metrics. We’ve already built up a solid list of eleven of those metrics:
While these metrics are nice, what we want to know is whether or not they tell us anything about performance. Using a bake-off analysis where we compare over three thousand stocks against each other for the eleven metrics and giving points to those that do better, we have the following as our top ten:
The individual tickers aren’t particularly important as is the overall performance of this basket. The average return is really strong. And, if we look at the ten stocks with the worst numbers for those eleven metrics, we see this for their return:
This is definitely a much worse performing portfolio!
What this means for us is that those eleven metrics appear to have some relationship with return. It makes sense - stronger fundamental performers should see stronger stock performance. It’s nice to see that confirmed in the top and bottom ten.
This is really jus the beginning tough. We’ve still got a ton of metrics to add to our inventory for stock analysis. Stay tuned for the next few posts where we will introduce all of them!