James O'Shaughnessy's Cornerstone Growth Strategy
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- Evaluates the three-month price appreciation to capture short-term trends in share price movement.
- Weight = 40%
- Calculates the one-year price appreciation to indicate annual trends in share price performance.
- Weight = 20%
- Calculates the inverse of the Price to Sales ratio to emphasize companies with strong revenue relative to their market cap.
- Weight = 40%
The Cornerstone Growth Strategy, as the name suggests, focuses on identifying stocks with strong growth potential.
This strategy often involves buying stocks of companies with high earnings growth, and looking for low Price-to-Sales (P/S) Ratios to indicate possibly undervalued companies.
James P. O’Shaughnessy's Cornerstone Growth Strategy methodology emphasizes key metrics such as a low Price-to-Sales (P/S) Ratio, Deflated Market Capitalization of more than $250M, and sales growth (earnings higher than in previous year).
Accountable Finance's Improved Cornerstone Growth Strategy adds shorter term price momentum screens for 1 and 3 month price appreciation. Though this carries a higher risk, it identifies stocks that are “on the mend.”