Fire Your Stock Analyst!: Analyzing Stocks on Your Own

Step 1: Analysts’ Ratings & Forecasts

Start by analyzing the analysts’ ratings and forecasts.

Sentiment Index

The sentiment index gauges the market’s enthusiasm by compiling the number of analysts rating the stock strong buy versus hold, sell, or strong sell. Negative sentiment scores mean that most analysts are recommending selling, and stocks with negative scores make the best value candidates. Boeing, for instance, trading in the $30 range, hit sentiment scores as low as –14 in late 1999 before starting its run to $70.

Stocks scoring as high as one or two could also be value candidates, but scores of three and above reflect positive analysts’ sentiment, which is inconsistent with value stocks.

Table 16-1 shows ATI Technologies’ analysts ...