How it Works

Overview.
Analytical Investing provides an objective tool for successful stock market investing. The idea is to identify undervalued stocks based on careful data analysis. For each company, we thoroughly analyze all relevant data, current and past. We compare it with that of the industry, sector, and overall market in order to compute an intrinsic value and set of ratings for each company.

Types of Ratings.
For each company, we provide an overall rating, as well as ratings in each of four categories: value, growth, timing, and safety. The overall rating is derived from the other four, and is intended to be a indicator of share price appreciation potential. The overall rating is what would normally be used to make buy & sell decisions, with the other ratings providing more detail about the strengths & weaknesses of each company. The value rating is an assessment of a company's current financial fundamentals, the growth rating is an assessment of a company's growth potential, the safety rating is an indicator of how well a company is protected against a sudden drop in share price, and the timing rating indicates whether or not it is a favorable time to purchase the stock.

Ratings Interpretation.
Our numerical ratings are the “grading system” we use to summarize our analysis. The ratings can be interpreted as follows:

80-100	Strong Buy
60-79	Buy
40-59	Hold
20-39	Sell
0-19	Strong Sell

Note that these ratings are absolute, and should not be thought of as percentiles. In other words, the percentage of companies in each group may vary considerably, depending on market conditions.

Active List.
We maintain an active list of recommendations, which is basically a list of stocks that we are currently tracking. These stocks have been recommended at some point, and have maintained an overall rating of at least 40 (“Hold”). The performance of each company on the list is tracked and reported each week. In addition, the overall performance of the active list can be viewed on the results page.

AI Select Portfolio.
We provide a sample portfolio, which shows how our recommendations might be used to build & maintain a diversified portfolio. The goal of the AI Select portfolio is to outperform the major stock market indices, while carefully managing risk. The portfolio holds between 25 and 30 companies, is diversified across industries, and maintains a balance between value & growth stocks. Portfolio trades are published on the web site a day in advance, so that clients can easily match (or even beat) the performance of the portfolio. The performance of the portfolio is tracked and reported each week. In addition, the long-term performance of the portfolio can be viewed on the results page.

Limitations.
Because our ratings are intended to optimize returns over a 1-2 year time period, they should not be used as a basis for short term trading or short selling.
Our service is intended to provide research on individual stocks. Advice on how stock market investments fit into an overall financial plan are beyond the scope of our service, and may require a professional financial advisor.