Category Archives: earnings

Tried, Tested, Working – even in these volatile markets

Have you ever bought a stock you thought had great earnings, only to see it fail miserably?

It is not enough to have a list of great fundamental stocks. You must go deeper into the analysis of each final candidate on the list. But, what other analysis can be done? At Top Stock Analyzer we use our own proprietary tool, we call the the FATI® Score to help us unlock profits.

The FATI® Score is based upon leading investment research studies which show stocks with a lower standard deviation of earnings estimates from the consensus (higher degree of agreement among analysts) the better performance of the stock. 

The study concluded stocks with a higher degree of earnings certainty (lower standard deviation of estimates) outperformed stocks with a lower degree of earnings certainty by +8.7% per year over a fifteen-year period. That is a significant performance enhancement. One which cannot be ignored. 
With out FATI® Score we fine tune stock selection beyond a list of great fundamentally screened stocks. There is no magic here, nor any guarantees, but face it; investing is hard enough. Why not select stocks which have a high probability of outperforming the markets both long and short?
Each week we generate a report of high scoring stocks both long and short, then feature one stock for an in-depth analysis.

Here’s an excerpt from our May 30, 2016 newsletter and the long stock that the FATI® Score highlighted 

Featured Stock – Dycom Industries – DY
Industry – Heavy Construction
Dycom Indiustries is a specialty contracting firm servicing
the telecom and utilities industries. The firm provides engineering, construction and maintenance services. They
have a long list of prominent clients, such as AT&T, Verizon, Comcast and Century Link. 
Dycom is experiencing enormous
growth due to the high demand for network and mobile bandwidth. As the bandwidth demand grows, customers need to
expand the capacity of their networks. This demand has created a backlog of over $5.6 billion is contract work
for Dycom. With this years sales growth estimated at over 26% earnings should continue to be outstanding.

As of 7/6/2016 DY was up 6.59% 

Here’s an excerpt from our June 6, 2016 newsletter and the long stock that the FATI® Score highlighted

Featured Stock – Copart, Inc. – CPRT
Industry – Auction/Valuation Services
Copart, Inc. provides online auction and related services to
process or sell salvage and marketable vehicles. The buyers and sellers include
insurance companies, banks and financial institutions, car dealerships, fleet
operators, and vehicle rental companies, licensed dealers and of course the
general public as well.
The company’s operations span the globe. Operations are well
established in Canada, Europe, South America and India. With increasing
revenues. declining expenses and global expansion into the Middle East, Copart
has been hitting on all cylinders. So far in 2016 the company has added 4 new
facilities to handle the increase in volume. Two in Colorado and two in Texas.
Earnings revisions are strong and are coming in higher
across quarterly and annual estimates. With a three year projected EPS growth
rate of 27% the party is not over yet. The P/E of 23 may sound expensive on a
relative basis, but with its EPS growth rate, it is actually reasonable.

As of 7/6/2016 CPRT was up 1.15% 

The ‘Short Side’ List

We also analyze for candidates to consider shorting for downward trending markets. The criterion for screening is not exactly the opposite of the long screen. To be most effective with the short list and minimize your risk associated with shorting, it is best to look for newcomers to the short list on a weekly basis.

Remember, shorting is an advanced trading technique. You have unlimited loss potential, so remember to be selective, use a stop loss order and only short in a confirmed downward trending market.

Here’s an excerpt from our June 13, 2016 newsletter and the short stock that the FATI® Score highlighted

Featured Stock – Conn, Inc. – CONN
Industry – Specialty Retailer
Conn, Inc is a regional specialty retailer in the southern
part of the U.S., in particular Texas and Louisiana. They sell home appliance
and garden equipment along with an array of other electronics. The company has
seen their gross margin severely impact by the rising cost of goods. In
addition their interest expense has doubled over the past year. These items, as
well as others have cause a severe contraction in earnings.
There doesn’t seem to be any daylight coming for Conn.
Earnings are expected to decline -89% this year, the P/E stands at 73 and F1
estimates have fallen from $1.77 to $0.11 over the past 90 days. Of the six
analysts following the stock, there doesn’t appear to be any agreement on the
actual EPS as depicted in a FATI Score of 534. Remember, anything over a score
of 12 or higher is disqualified from our long recommendations list.
With a pending market decline and the growing deterioration
of Conn, Inc. fundamentals, we see this as a good shorting opportunity. As with
any short trade, place a stop order and monitor the stock daily.

As of 7/6/2016 CONN was up 12.73% 

Putting it All Together

There you have it. “Fundamentals Made Simple”. Just select your stocks from the list and go right into your technical analysis. All the fundamental screening has already been done for you. Each and every week you will receive an updated screening of Top Stock Analyzer with the power of the FATI® Score. You can see the score of each stock. 

Here’s our featured stock performance as of 7/6/2016

Our weekly newsletter is a collaboration between AIQ Systems LLC and Fortunatus Advisors, Inc. if you want to learn more about our service visit 

One of the things …….. is that the U.K. is not in great financial shape right now – comments June 21, 2016

The Dow shot up over 270 points at the open, then spent the rest of the day giving back about half of those points to close up 130 at 17,805.  Volume was moderate, coming in at 96 percent of its 10-day average.  There were 178 new highs and only 9 new lows.

Yesterday’s rally was the Big Move predicted by last Thursday’s small change in the A-D oscillator.  It also came on the heels of last Wednesday’s VIX Buy Signal.
The rally was fueled by two polls released in the U.K. over the weekend that showed the ‘Stay’ vote taking a small lead. Prior polls had been showing the ‘Leave’ vote with a small lead, so the markets took the change in polling as a positive sign.  I wouldn’t get too excited about the polls, because the result of Thursday’s vote is still way too close to call, especially in view of the impact that a ‘Leave’ vote could have on financial markets.
One of the things that students should realize is that the U.K. is not in great financial shape right now.  The country is running significant account deficits and a lower pound won’t be that much help to British consumers and exporters.
In September 1992, when the UK last devalued its currency by 15 percent, the country was able to recover because interest rates had been running over 10 percent, so consumers and businesses benefited by the devalued pound which lowered interest rates.  But now with interest rates running near zero, a 10-15+ percent devaluation of the pound could have entirely different consequences.  It could severely impact the UK’s economy and put the country into a deep recession that could take years to recover.
So we need to be on our toes going into Thursday’s vote.  If the ‘Leave’ voters win, Friday could be a very bad day for world markets.  On the other hand, IF the ‘Stay’ voters get the upper hand, world markets should react positively with the Dow likely to re-test the 20 April high of 18,168.
Please be careful going into Thursday.  In my opinion, the vote on Brexit is too close to call and could go either way.  This means that the risk to your portfolio is very high.
So because of the high risk, I am mostly focused on short-term scalps.  With a positive Dean’s List, a neutral Tide, and negative DMIs and Money Flow indicators, the cockpit indicators are about as mixed as they can be.  They’re telling me to be on the sidelines or scalp trade only.

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However, my custom VTI turned positive after yesterday’s trading, so I’m going to look for scalp trades to the long side today.  One of the things I’ve found is that whenever the VTI changes direction, stocks highlighted for the Honor Roll tend to do well over the short term.  We’ll see if this holds true today with BP and Continental Resources (CLR), the two energy stocks that were highlighted last night.
My other focus will be on gold.  Yesterday’s early rally in the equity markets caused most gold stocks to pull back.  It also caused UUP to drop off the Dean’s List and the UDN, inverse Dollar ETF, to re-appear. So for the very short term, the Dean is telling is us the Dollar is weakening, which means the environment for gold could be getting stronger.
Also, the 2-period RSI Wilder on ABX closed with an oversold reading of 22.17. So with ABX in an Uptrend (50>200) and an oversold RSI on the Daily chart, its telling me that it might be a good time to go hunting. I spent several hours last night polishing my Rifle)
That’s what I’m doing,
The Professor
Market Signals for

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