Stock Picking Rules
Long Term Stock Picking Picking Process:
The Back Office Investor long term investing system uses a combination of algorithms, technical indicators and fundamental data to generate buy and sell signals and to monitor a stocks performance.
Algorithms :
Our bespoke database uses algorithms which have been developed and tested for over 12 years, ( yearly target is 15% excluding dividends ).
Technical Indicators :
A number of technical indicators have been developed within our database to ensure accurate triggered buy and sell signals are generated. A key indicator we use is an SMA (Simple Moving Average)
Fundamental Data :
When a stock has triggered a buy, the Back Office Investor fundamental data is reviewed and only if the stock passes our strict fundamentals rules is it considered a true buy.
When a stock has triggered a sell, the fundamental data is reviewed but in almost all cases the stock remains a sell.
This is the fundamental data we use.
1 – Average Daily Volume:
Must have an average daily volume over the previous 240 days of greater than or equal to 500,000 trades.
2 – Pay a Dividend:
The company must have been paying dividends for at least the previous 5 years.
3 – Turnover:
Turnover must be increasing year-on-year for the previous 10 years.
4 – EPS – Earnings Per Share:
Earnings Per Share must be increasing year-on-year for the previous 10 years.
5 – PE – Price to Earnings:
Price to Earnings must be between 10 and 25 for the previous 10 years.
6 – ROE – Return on Equity:
Return on Equity must be greater than 10 % year-on-year for the previous 10 years.
7 – ROCE – Return on Capital Employed:
Return on Capital Employed must be greater than 10 % year-on-year for the previous 10 years.
8 – Pre Tax Profit:
Pre Tax Profit must be increasing year-on-year for the previous 10 years.
9 – BVPS – Book Value Per Share:
Book Value Per Share must be increasing year-on-year for the previous 10 years.
10 – Free Cash Flow:
Free Cash Flow must be increasing year-on-year for the previous 10 years.
11 – Debt To Capital Ratio:
Debt to Capital Ratio must be less than or equal to 50% for the previous 5 years.
12 – Dividend History:
Divided payments must be increasing year-on-year for the previous 5 years.
13 – Daily Percent Change:
Daily Percent Change must increase per time scale.
14 – Buy and Sell Signals:
Buy and Sell signals must be triggered by the BOI system.
15 – Limit 5% of Total Fund:
Limit the purchase of shares in any one company to 5% of the total fund.
Back Office Investor will automatically be adjusting and improving your portfolio, as you follow our long term investments, you will begin to sell underperforming stocks and will start buying good performing stocks, this will naturally happen as you follow us.
Soon you will only be holding good performing long term dividend paying stocks.
This is what Back Office Investor is all about.
Good luck to all investors.