Individual stocks on February 22, 2018: strategy


I stated that even a simple quantitative strategy can be used to successfully pick & trade individual stocks over the long run. Here are the simple strategy’s BUY and SELL signals in action.
The simple strategy says that in a bull market

  1. You should only go long stocks with above average earnings growth. The S&P 500’s projected earnings growth is 15.3% for 2018.
  2. You should only go long stocks that are above their 50 daily moving averages (CLOSE). This is essentially a momentum play for trend followers.

We’re looking at the following stocks today:

  1. IBM
  2. Chevron
  3. Google (Alphabet)
  4. Wal-Mart
  5. JP Morgan

IBM

IBM is expected to see an earnings increase of 0.25% in 2018. This is much less than the S&P’s forecasted earnings growth of 15% in 2018.
IBM is below its 50 sma. Its earnings growth is also subpar. Based on the simple strategy, you shouldn’t go long IBM.

Chevron

Chevron is expected to see an earnings increase of 72% in 2018. This is much more than the S&P’s forecasted earnings growth of 15% in 2018.
Chevron’s earnings growth is far superior to that of the S&P’s. Based on the simple strategy, you should buy Chevron once it breaks above its 50 daily moving average.

Google (Alphabet)

Alphabet (Google) is expected to see an earnings increase of 32% in 2018. This is much more than the S&P’s forecasted earnings growth of 15% in 2018.
Google’s earnings growth is superior to that of the S&P’s. It is also above its 50 daily moving average. Based on the simple strategy, you should buy and hold Google with a stop loss at the 50sma.

Wal-Mart

Wal-Mart is expected to see an earnings increase of 10.63% in 2018. This is less than the S&P’s forecasted earnings growth of 15% in 2018.
Wal-Mart is below its 50 sma. Its earnings growth is also subpar. Based on the simple strategy, you shouldn’t go long Wal-Mart.

JP Morgan

JP Morgan is expected to see an earnings increase of 27% in 2018. This is much more than the S&P’s forecasted earnings growth of 15% in 2018.
JPMorgan’s earnings growth is superior to that of the S&P’s. It is also above its 50 daily moving average. Based on the simple strategy, you should buy and hold JPMorgan with a stop loss at the 50sma.

Read Individual stocks on February 21, 2018.

1 comment add yours

  1. Interesting. I’ve owned JPMorgan and Google stock since the First Quarter 2015. They have been excellent buys.

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