By Michael Kaye, CFA Standard & Poor's offers a number of investing tools to help investors make smart decisions. Our offerings cover a range of analytical approaches, including qualitative, quantitative, and technical. And we've also developed a "metric of metrics" that combines four different investing models incorporating our proprietary analytical products. It's called Investability Quotient (IQ), and it's a way to rank stocks according to their potential for medium- to long-term return.
S&P's IQ model combines models using proprietary analytical tools, technical measures, liquidity and volatility indicators, and quantitative analysis to come up with a total score. Under the IQ system, companies are scored on a scale of 1 to 250 -- similar to the standard measure of human intelligence -- with the higher numbers signaling stronger potential.
The IQ model is a combination of four different sub-models:
An S&P proprietary model based on
STARS ranking, quality of (
earnings and dividend), and an outfit's
A proprietary, multi-factor statistical model that includes valuation, profitability, risk, and momentum factors.
volatility model that measures liquidity and downside risk.
A technical model that looks at six-month
The following are the 10 companies with the highest S&P IQ score (in descending order):
Smarter than your average stocks
S&P STARS Rank
S&P IQ Rank
Lehman Bros. (LEH)
Black & Decker (BDK)
MBNA Corp. (KRB)
Exxon Mobil (XOM)
Bank of America (BAC)
Kaye is a portfolio services analyst for Standard & Poor's