Value of Earnings
Box Stocks.pptx
I ran a study over the last 12 months to verify if stocks with stronger earnings were leading stocks with lower earnings. In a junk off the bottom environment we need to convince ourselves if earnings still rule.
I exported all stocks in the MarketSmith database trading above $5. I filtered out all thinly traded stocks trading below $10M per day (50-day avg volume times current price).
I applied a definiton of 5-year average earnings and quarterly earnings averaged over the last two quarters developed by Ian Woodward which boxed stocks into a 9-Box matrix. These he calls "HGS Box Stocks" but maybe should be called IBD Box stocks here.
I computed 12-month gains for each stock and averaged by Box.
The results are summarized in the attached powerpoint file.
Bottom line is that strong annual earnings and quaterly earnigs still rule.
If anyone wants the backup excel spreadsheet I will post that also.
Mike Scott
Cloverdale, CA
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Originally Posted by mscott
