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Bullish vs. Bearish (all categories): Companies with scores 7 and up are considered bullish (in the category). Companies with scores 4 and below are considered bearish. In both cases, it is essential to consider the market and sector trends.
Short term vs. Long term (Technical category): If the trade has a short horizon (or a one-off trade), it is vital to consider the technical grade (though it can change quickly). For longer-term trades that where you also consider rolling, you might be able to ignore it and trade expecting it to change, and focusing on the other categories of the score.
High probability trade vs. unlimited profit trade (Fundamental score vs. growth score): While both fundamental and growth scores are important; we believe that if you trade a high probability trade (selling OTM options, for example) fundamental score will be more important and will give you a better margin of safety of the trade. If you have unlimited profit trade (or high-profit ratio), you might want to take trade high growth stocks that tend to surprise market participants and grow faster than expected.
Guide further research (all categories): Another great advantage of breaking the score to groups is to allow you to see red flags and points that are important to note. For example, if a stock has a low growth score, it is essential to check the past growth and why the analysts think the growth will continue to slow. This can help you when deciding what to trade.
Stock Score
Samurai stock score is a unique quantitative fundamental measure that we built to grade stocks from best (10) to worse (1). It was designed to help you easily and quickly find stocks that are strong (or weak) fundamentally so you can integrate them with your scans.
Our scanner has 100s of filters to sharpen your edge in regards to the options parameters, technical parameters, IV, and more. The Samurai stock score will help you quickly integrate a fundamental edge to your scans.
Our scanner has 100s of filters to sharpen your edge in regards to the options parameters, technical parameters, IV, and more. The Samurai stock score will help you quickly integrate a fundamental edge to your scans.
The Stock Score
We broken up the score into three categories, each is graded from 1 (weakest) to 10 (strongest) in that category. The different categories will allow you to filter and sort stocks that fit your specific trade; for example, Technical grade is excellent for short term trades, while value grade is best used for long term trades.
Fundamental - The fundamental aspect of the score grades the value and the quality of the company. For a company to get a good score, it needs to be high quality and 'cheap' measured by ratios (such as Price-Earnings, Price-Sales, etc.) and other metrics (such as dividend yield, Return On Equity, etc.).
Fundamental - The fundamental aspect of the score grades the value and the quality of the company. For a company to get a good score, it needs to be high quality and 'cheap' measured by ratios (such as Price-Earnings, Price-Sales, etc.) and other metrics (such as dividend yield, Return On Equity, etc.).
Growth - The Growth aspect is a quantitative grade that measures the company's growth in the past and the future (according to analysts). For a company to get a good score, it needs high past growth, AND the analysts need to project a continuation of that growth (both in Sales and EPS)
Technical- The Technical aspect is a quantitative grade that measures the company's price action and relative strength. For a company to get a good score, it needs to have high relative strength compared to the market but not be overbought.
How to use:
Sorting: You can use the stock score for sorting your scans and thus save time analyzing trades and allocate your cash better. This also makes sure that you always see the strongest/weakest stocks in the market, and you stay on top of the market movements.
Filtering: You can also use it to filter trades and focus on stocks that will give you an edge. While obviously, we all want stocks that perform well in all aspects, there are great companies to trade that are expensive (so have low value-score). In the same way, if you want to sell a high probability put, you might focus on high-value stock, even if growth and technical scores are not good.
Filtering: You can also use it to filter trades and focus on stocks that will give you an edge. While obviously, we all want stocks that perform well in all aspects, there are great companies to trade that are expensive (so have low value-score). In the same way, if you want to sell a high probability put, you might focus on high-value stock, even if growth and technical scores are not good.
Some of the more common considerations for the groups:
Bullish vs. Bearish (all categories): Companies with scores 7 and up are considered bullish (in the category). Companies with scores 4 and below are considered bearish. In both cases, it is essential to consider the market and sector trends.
Short term vs. Long term (Technical category): If the trade has a short horizon (or a one-off trade), it is vital to consider the technical grade (though it can change quickly). For longer-term trades that where you also consider rolling, you might be able to ignore it and trade expecting it to change, and focusing on the other categories of the score.
High probability trade vs. unlimited profit trade (Fundamental score vs. growth score): While both fundamental and growth scores are important; we believe that if you trade a high probability trade (selling OTM options, for example) fundamental score will be more important and will give you a better margin of safety of the trade. If you have unlimited profit trade (or high-profit ratio), you might want to take trade high growth stocks that tend to surprise market participants and grow faster than expected.
Guide further research (all categories): Another great advantage of breaking the score to groups is to allow you to see red flags and points that are important to note. For example, if a stock has a low growth score, it is essential to check the past growth and why the analysts think the growth will continue to slow. This can help you when deciding what to trade.
Summary
The stock score can help you quickly filter out stocks according to your trading style. This will increase your edge, save you time, and improve your capital allocation. You can also sort according to score so you will always stay up to date with the strongest stocks in the market as trends shift.
Read more:
Our unique features in the Knowledgebase (KB)
Examples on how to analyze the new stock score (Blog)
Maintenance note:
This stock score improves our old stock score. We will deprecate the old score at the end of 2020. During this time, we will support both scores and migrate all scans to the new score. Feel free to ask us if you need any assistance.
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