Latest news with #QualityFactor
Globe and Mail
6 days ago
- Business
- Globe and Mail
Finding overlooked quality U.S. stocks with strong momentum
With the S&P 500 trading within 4 per cent of its all-time high at the time of this writing, investor attention is focused on stocks showing strong momentum. Our screen aims to uncover outperforming U.S.-listed companies that combine robust price performance with solid fundamentals using Trading Central's proprietary Quality and Momentum factor rating approach. By including midcap names with liquidity filters, we're seeking quality stocks that may be overlooked by traditional analysts, yet are well-positioned in today's resilient equity market. Using Trading Central's Strategy Builder, we screened for U.S.-listed stocks with a market capitalization between US$500-million and US$5-billion, focusing our search on small- and midcap companies which are big enough to be stable and liquid, but small enough to still offer significant growth potential and possibly be overlooked by the broader market. To target liquid and tradable securities, we included only stocks with listed options and set a minimum share price of US$10, helping to avoid highly speculative or illiquid names. To identify stocks that have seen increased investor interest, we required the 10-day average trading volume to be at least equal to the 90-day average, signalling recent momentum in trading activity. We focused on companies demonstrating both strong price momentum and solid fundamentals by setting minimum Trading Central Momentum and Quality Factor Ratings of 60 out of 100, respectively. The quality-factor group measures the total financial strength of the company in regard to profitability, the robustness of its balance sheet and earnings quality. The momentum factor refers to the tendency of winning stocks to continue performing well in the near term. Finally, to ensure our screen included stocks maintaining positive trends, we required that each stock be no more than 15 per cent below its 52-week high, identifying companies trading near their recent peaks and exhibiting sustained strength. For informational purposes, we have also included year-to-date, and one-year return. Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide. Topping our list is Heritage Insurance Holdings Inc., a property and casualty insurer that has delivered a remarkable 185-per-cent return over the past year, the highest on our list. With a price-to-earnings ratio of just 9.21 and a momentum factor rating of 93, Florida-based Heritage stands out for both value and price momentum. Despite its modest market cap of US$720-million, the company's strong TC Quality Factor rating of 63 and sustained price rally make it a compelling choice for investors seeking under-the-radar growth. One Gas Inc., a regulated natural gas utility serving more than 2.3 million customers across Oklahoma, Kansas and Texas, has the highest market cap on our list at $4.41-billion. The Oklahoma-based company's stock has a TC Quality and Momentum factor rating of 63 and 87 respectively, which is strong. The stock has been outperforming the broad market like all the stocks in this screen, with a 25.6-per-cent return year-to-date. Vancouver's MAG Silver Corp., a leading precious metals producer, caught our attention because of its recent increase in trading volume. The stock's 10-day/90-day volume ratio of 1.51, the highest in our list, suggests it is currently attracting more attention from investors. The stock recently posted a new 52-week high. Trading Central Strategy Builder provides a back-testing capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had an impressive 25-per-cent annualized return compared to 14 per cent for the S&P 500 Index. The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing. Gary Christie is head of North American research at Trading Central in Ottawa.
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Business Standard
07-05-2025
- Business
- Business Standard
Rs 1 Lakh to Rs 26.8 Lakh: Can the Quality Index outrun the Nifty 200?
Over the past two decades, investing in 'quality' has paid off. Since April 2005, Rs 1 lakh invested in the Nifty 200 Quality Index would have grown to Rs 26.8 lakh, nearly doubling the ₹14.5 lakh return from the broader Nifty 200 TRI over the same period. This outperformance raises a key question for investors: what exactly is a quality stock, and should it be a core part of your investment strategy? Source: NSE Indices Ltd. Data as on March 31,2025. Past performance may or may not be sustained in the future. For indices TRI value is used A Quality Index is a stock market index that tracks companies with strong fundamental characteristics—typically those considered financially healthy, stable, and efficiently managed. Performance of Quality Strategy Historical data shows that the quality style has demonstrated good risk-adjusted returns and greater return predictability compared to value, momentum, and alpha strategies: On a 5-year daily rolling return basis, the quality strategy delivered an average return of 17.4% with the risk-adjusted return ratio (RAR) of 3.3 Since April 2005, an investment of Rs 1 lakh in the quality index would have grown to Rs 26.8 lakh, compared to ₹14.5 lakh for the broader Nifty 200 TRI. Source: NSE Indices Ltd. Data as on March 31, 2025. The Investment Period is considered from April 2005 to April 2020. Returns are considered from April 2010 to March 2025. Past performance may or may not be sustained in the future. RAR: Risk Adjuste ICICI Prudential Mutual Fund on Monday launched the ICICI Prudential Quality Fund, an open-ended equity scheme following the Quality Factor as theme. This New Fund Offer (NFO) opens on May 6, 2025 and closes on May 20, 2025. The scheme aims to invest in companies that exhibit stronger fundamentals such as high return on equity (ROE), robust cash flows, low financial leverage, and a history of sound capital allocation. These factors, combined with a reasonable valuation approach, can form the backbone of the scheme's stock selection strategy. 'In today's environment of economic uncertainty and moderating growth, business with sound financials and sustainable profitability stand out. ICICI Prudential Quality Fund aims to tap into this potential by selecting high quality* companies available at reasonable valuations, thereby aiming to build a resilient portfolio designed to perform across market cycles. With attractive valuations in the quality segment, we believe this is an opportune time for investors to adopt a quality-focused strategy," said Sankaran Naren, ED & CIO of ICICI Prudential AMC. Why invest in quality now? Amid growing global economic uncertainties, including geopolitical tensions, elevated interest burdens, and a moderating domestic earnings cycle, the AMC believes that quality stocks can weather the storm. These companies generally outperform in periods of volatility due to their sound balance sheets and growth records. While the quality theme had underperformed broader markets and other styles like momentum, value and alpha in recent years, this has resulted in more attractive entry valuations today. Data as on March 31,2025. Returns are on absolute basis Past performance may or may not be sustained in the future. FY: Financial Year. For Quality: Nifty 200 Quality 30 TRI, for Value: Nifty 200 Value 30 TRI, for Momentum: Nifty 200 Momentum 30 TRI, Flexible & Research-Driven Approach The ICICI Prudential Quality Fund will follow a flexible investment strategy, drawing from both top-down (macro and sector-level) and bottom-up (company-specific) research. It will help maintain the flexibility to invest across sectors and market caps. The fund's portfolio construction process involves narrowing down a universe of approx 625 companies to around 40–60 names, based on stringent quality and valuation filters. Scheme Details:
