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Testing O-Metrix PDF Print E-mail
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Written by Dr. Econ   
Tuesday, 12 August 2008 11:50

The O-Metrix Grading System is a very simple, yet extremely powerful method to rank stocks based on their future return potential. It is based on three simple parameters. Dividend yield, Earnings Growth and Price to Earnings Ratio. As an investor we want to purchase a high-growth, high-dividend company at a discounted price. Thus, the O-Metrix formula is based on following equation:

O-Metrix = 5 x (Dividend Yield + Earnings Growth) / PE Ratio

If you are a dividend-income oriented investors, use Double Dividend O-Metrix Score as such:

DD O-Metrix = 5 x (2 x Dividend Yield + Earnings Growth) / PE Ratio

I multiply the numbers by 5 to get a scale over 10.

Here is a a letter grading system:

  • 10+ : A+ Grade Stock
  • 8 to 10: A Grade Stock
  • 6 to 8: B Grade Stock
  • 4 to 6: C Grade Stock
  • 2 to 4: D Grade Stock
  • 0 to 2: F Grade Stock
  • <0 : Sub-F Grade Stock

As investors, it is our mission to find stocks with A+ scores. Such opportunities rarely exist. Always be on hunt. I back-test the model on specific sectors and the results are promising. Here, is a list of articles on sector by sector back-testing models on O-Metrix grading system:

A Back-Testing Model of the Best Technology Stocks for the Long-Term Investors

A Back-Testing Model of the Best Industrial Dividends for the Long-Term Investors (June 14, 2011) - (Caterpillar,Dover,General Dynamics, Raytheon, Lockheed Martin, Eaton, MMM, Boeing, Goodrich, etc.)

A Back-Testing Model of the Best Mid-Cap Basic Material Dividends for the Long-Term Investors (June 12, 2011) - (BP Prudhoe Bay Royalty Trust, Natural Resource Partners, Enbridge Energy Partners, Sunoco Logistics, Magellan Midstream Partners, Alliance Resource Partners LP, Alliance Holdings, etc.)

A Back-Testing Model of the Best Electric Utility Dividends for the Long-Term Investors (June 6, 2011) - (Atlantic Power, Dominion, Edison International, NextEra, Southern Company, Duke Energy, Progress Energy, etc.)

A Back-Testing Model of High Dividend Stocks for the Long-Term Investors (May 23, 2011) - (Apple, Cisco, Chevron, Telefonica, McDonald's, Walmart, General Electric, etc.)


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Download this file (FairValueFinalWeb.xls)O-Metrix CalculatorDownload Free O-Metrix CalculatorDr. Econ31 Kb10/09/11 12:03
Last Updated on Thursday, 20 October 2011 09:13
 

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