Smart Picks from the IQ List
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:
• A proprietary, multi-factor statistical model that includes valuation, profitability, risk, and momentum factors.
• A technical model that looks at six-month relative strength.
The following are the 10 companies with the highest S&P IQ score (in descending order):
Kaye is a portfolio services analyst for Standard & Poor's