Fire Your Stock Analyst!: Analyzing Stocks on Your Own

Step 1: Analysts’ Ratings & Forecasts

Growth investing works best when you find stocks garnering increasing interest from market participants. Analysts’ buy/sell ratings and earnings forecasts are a key indicator of market enthusiasm.

Sentiment Index

Use the sentiment index to confirm that you have a viable growth candidate. Strong negative scores such as –4 or lower typically identify value rather than growth candidates. Index scores of nine or higher mark growth stocks with unusually high market expectations, hence, higher than usual risk.

Qualified growth candidates with low sentiment index values (e.g., –2 to +2) often have the strongest upside potential. Increasing sentiment index values, say from 1 to 4, signal growing expectations, which ...