Many of the financial investing publications have proprietary stock analyzing tools. For example, Investor’s Business Daily has their IBD Composite Rating. Stocks with a composite rating of 95 or higher are likely to outperform the broader market. The Composite Rating is a relative index which means that a stock with a score of 93 is outperforming 93% of all stocks in the areas that IBD measures. The composite rating ranges from a rating of 1 (represents the worst) to 99 (best). The Composite Rating is an overall score that is based on the grade a stock may receive in four of what IBD calls their SmartSelect Ratings that include:
Earnings per Share (EPS) Rating– which tracks annual and quarterly earnings
SMR Rating– which measures sales growth, profit margins and return on equity
Relative Strength (RS) Rating– provides an analysis of a stock’s relative price strength compared to the S&P 500.
Accumulation/Distribution Rating– tracks the level of buying and selling of stocks by institutional investors over the previous 13 weeks