Process
Sensex has grown at about 15% annually for the last four decades. Yet many studies have established that around 95% of retail investors incur losses. Most of them do not understand balance sheets, cash flows, financial statements etc. It is tough for them to conduct stock research. There are hundreds of ratios that need to be examined and compared to the specific norms of their industries. Thus it is natural for them to rely upon tips from friends, TV and so called experts. Another mistake is following "Stock has gone down, so it will now go up”, and ironically the exact opposite, "Stock has gone up, so it will go up further". Unfortunately, these tactics do not work.
StockScore makes the required research simple for you. It analyzes over 12 million data points and compares 200+ parameters of a stock as well as the underlying company pertaining to various aspects like price, debt, growth, risk etc on both standalone and consolidated basis.
So, how does StockScore achieve this? To find answer to the question “Is xyz a good stock?”, we use the bottom-up approach of reasoning. Let us break the question into several smaller ones.
- → Is this company growing?
- → Is it an ethical company?
- → Is its debt under control?
- → Is the share price reasonable?
- → Is it better than its peers?
- → ......
- → ......
- → Is the company growing in terms of sales, profits, cash flow etc?
- → Is it growing on Year on Year and TTM basis?
- → Is it growing more than its competition?
- → ......
- → ......
- → Does the company pay tax honestly?
- → Does it give dividends?
- → Is the shareholding proper
- → How much of the income is likely to be absent in future?
- → ....
- → ....
For example:
We may break down each question further. For example, the first question can be broken down to:
Similarly the second question can be broken to:
When we answer dozens of such questions and compile the findings, we will start getting a fair idea of whether this stock is good or not.
This is what StockScore does, it asks hundreds of questions. As the image below shows, it assigns scores to all these ratios/parameters/questions based on the situation.
Then it collates the answers. However, all questions are not equally important. The StockScore AI learns from past to determine which parameters are more critical for a particular sector. Thus, it assigns suitable weightages to them. Not only that, it is continuously learning and updating weightages in response to the market developments.
Thus, it gathers all Debt related findings and combines them into a Debt Score. Similarly, it compiles Growth Score, Price Score, and so on. Then it weights and analyzes these key level Scores and turns them into a single StockScore. If you have checked the StockScore of a company, you have already checked through a sea of information about it.
Expected returns
The StockScore has been checked against past data of more than 15 years. It is very clear that stocks with high StockScore outperform Sensex whereas the ones with low figures underperform it. Below graph should tell how much StockScore can help you in deciding which stocks to buy and which not to.
Please note, above graph is with repect to Sensex and including Dividends. So based on past data, if you buy a stock with StockScore as 1, you are likely to make a Sensex Adjusted Loss of about 34.3%. What this means is that if Sensex goes up by 10%, you might still lose 24.3% of your investment and if it is a bad year and Sensex goes down by 10%, you might actually lose about 44.3% of your investment. In other words, whatever Sensex does, Company with StockScore 1 most likely will do much worse than that.
On the other hand, Companies with StockScore 100 are likely to go up by about 11.6% on Adjusted basis including Dividends. So if Sensex goes up by 10%, StockScore 100 Companies are likely to return you 22.6%. However, if it is a bad year and lets say Sensex tanks by 12%, StockScore 100 Companies are still likely to stay around the same level, saving your investment.
Whether you do trading or investing, whether you invest for long term or short term, whether you use technical analysis or fundamental analysis, checking the Stockscore will help you in picking better stocks. For a very long time, Retail investors have not been able to profit from stock market because of lack of expertise. We hope this free tool will level the playing field a little and help you take advantage of the opportunities stock market provides.
For any questions please refer to FAQ section. If you have any feedback, please feel free to share it with us.
Wish you very all the best.