Mike, Regarding EPS rank.... I don't know how either of the sources calculate their information, but O'neil does mention what factors go into the EPS rank calculation (not the formula). He cites EPS growth on both a long and short term basis (3-year and quarterly), acceleration in EPS and something called earninings stability. Stability seems like possibly a line fit vs. standard error of the EPS numbers. All these factors go into the EPS rank calculation. From IBD's website: "Earnings Per Share (EPS) Rating Exclusive rating found in Investor's Business Daily's SmartSelect® Corporate Ratings. Stocks are rated on a 1 to 99 scale (with 99 being best) comparing a company's earnings per share growth on both a current and annual basis with all other publicly traded companies in the William O'Neil + Co database. Stocks with EPS Ratings of 80 or above have outperformed 80% of all publicly traded companies in earnings. The EPS Rating combines each company's most recent two quarters of earnings-per-share growth with its three- to five-year annual growth rate." You have to ask yourself what they do for EPS numbers that went negative and then went positive. For instance if you had -0.10 EPS one quarter and then the next quarter you had 0.01 EPS you would theoretically have a gain of (0.01-(-0.01))/(-0.01)*100% = -200%, which is negative even though clearly earnings improved. If you use the absolute value of the denominator then you'd get +200%, but earnings have clearly not tripled 3*(-0.01)=-0.03! You also have to consider what form of earnings each source uses for their data. GAP Accounting, diluted earnings, etc. IBD uses something different than most other sources - I forget what its called. Because I have no idea what their formulas are I developed my own ranking system using Excel's PERCENTRANK() function and it does tend to turn up many of the same stocks as IBD and/or Stocktables.com. I've also found similar inconsistencies to what you've found between my own ranking and that of IBD or Stocktables. I was using Reuters Powerscreener to get all my fundamental data. What it boiled down to for me was that if you use a consistent methodology on what you've researched or have read is "good" and also come up with some way around the zero crossing issue that I mentioned above any of the rankings are probably just about as good as another. My normalized ranking research has showed that sales growth seems to be a better pointer to future returns and profit margins and ROE are also important. The goal for the Jack Hershey method is to cull the huge universe of stocks down in to a managable set of "quality" stocks. There are so many ways to define a "quality stock" depending upon who you are. If you look simply for a record of high earnings growth and acceleration +25% or +50% in Q/Q and Y/Y eps growth I think you'll get the right level of quality from an EPS growth perspective and you won't have to agonize over what ranking is better. - ace
Spydertrader, A couple of questions: {I'm not done reading everything, but getting there. It seems like I keep finding more in what I read and more to read.} 1. I'm not clear why the 200k per day 65 day average volume requirement. I think I've seen references that 100k is good also. And, a reference or 2 that JH chose that level of activity to suit his trading large volumes and needed that type of activity so he would not overly move the market. Has anyone looked at a lower limit? I think one of the underlying principals to the selection of the universe is trading "thinly traded" stocks (not too thinly though), so they "pop" when buying pressure comes. So, it follows (to me) that a lower average trading volume is consistent with this principal. 2. Has anyone looked at setting DUV at some percentage of "float"? Say, at 1.5% or less of float. Some symbols that I've had on my watch list show: I'm showing the DUV calculated at WL / float for these: BOOM 10.0% NFLX 1.3% NGPS 1.7% RATE 0.6% KNDL 0.7% VDSI 0.8% JMDT 1.0% PTC 0.7% From this quick look, it does not seem to work but most seem close to 1%. Doug
Took profits on NGPS @ 31.10... Glad I did. Still waiting to be stopped out on VDSI (very soon). I can't believe two times it opens up and I did not get out. Too busy trading ES for myself... After these two trades cancelled out each other, I will be short $100 for my Dad. He's gonna fire my ass.
Have anyone tried trading stocks > $50 with this method? I get a sense that our stocks are too much of a double edge sword on a day like today.
Thanks; good way to look at it. I also get the data originally through Reuters but I found the fairly cheap program at AAII (Assoc of INdiv Investors) that puts all the data into a pretty easy weekly download and allow me to build screens in there (or export to Excel/Access to do my work). Mike
Ticker DU Vol as % of Float ASTE 0.30% CKCM 1.55% CMT 1.23% DCAI 1.17% ELOS 1.46% FORD 6.68% GEOI 8.28% HANS 2.29% IIG 0.66% IRIS 0.47% ITRI 0.74% JMDT 1.49% MCRI 0.77% MFLX 0.61% NGPS 2.48% RADS 0.32% RTSX 0.63% SNHY 1.31% SOLD 0.38% TRGL 1.06% VDSI 0.85% VPHM 1.32% LUFK 0.72% CTHR 0.43% RATE 0.55% Some stocks from the previous journal with DUV as a % of float. -ace
Final Universe Update The following stock has been ADDED to the Final Universe List as of 2005-11-28: NDAQ. - Spydertrader
I think the 90 EPS ranking cut is a basic filtering to reduce the universe to a set of quality stocks. A filter like TTM EPS growth > 10 would probably do as good, considering that in some cases we have stocks that pass the stocktables ranking filter but still have negative earnings. IMO the focus of this methodology is on volume and price cycle analysis so I wouldn't stress out EPS and RS rankings too much, unless you have a set of specific fundamental criterias that bring in an additional edge.