How Successful Investors Get RICH

Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor.

How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.

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Topic: How To Invest

How to make winning stock picks with our Successful Investor rating system

You’ll find one of our six Successful Investor ratings displayed next to every stock we cover in each of our four investment newsletters.

These ratings are a key guide we use to manage the portfolios of clients of our Successful Investor Wealth Management service. And they can give you a leg up in adding winning stock picks to your portfolio, too.

Our top rating is Highest Quality, followed by Above Average, Average, Extra Risk, Speculative and, at the bottom of the scale, our riskiest, lowest-quality rating of Start-up.

We award these ratings on a point system, using nine key factors to determine a company’s ability to survive a business setback and go on to greater success when conditions improve. If a company scores highly, it has a far greater likelihood of being one of our winning stock picks.

How Successful Investors Get RICH

Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor.

How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

Our nine factors are for determining company’s potential to be among our winning stock picks are:

  • One point for a long-term record of profit;
  • One point for a long-term record of dividends;
  • One point for industry prominence — two points for industry dominance;
  • One point for an attractive balance sheet, with adequate equity and working capital, and manageable debt;
  • One point for Canada-wide operations, or two points for multinational operations;
  • One point for being able to serve all shareholders’ needs. To merit this point, firms must be free of excess government regulation, free of too much dependence on a single supplier, and free of insider abuses;
  • One point for freedom from business cycles;
  • One point for the ability to profit from a secular trend, or two points for the ability to profit from two or more secular trends. Secular trends (such as the global move toward economic liberty and free trade) go far beyond mere business cycles; they reflect ongoing changes in society;
  • One point for offering products or services that profit from habitual behaviour.

Companies with 11 or 12 points fall into the top category: Highest Quality, and are the ones we focus on when we look for winning stock picks. Those with eight to 10 points are Above Average. Six or seven points mean they are Average. If a stock has just four or five points, it carries Extra Risk (that is, more risk than average); two to three points, Speculative; one or no points, Start-up.

Unlike computerized risk assessments, our ratings demand many judgment calls. But we find this system gives us a deep-seated measure that goes to the heart of a company’s staying power, and yields few unfortunate surprises.

If you’d like me to personally apply my value-investing approach to your investments, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.

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