The “asset growth lower is better” signal aims to invest in the lowest growing companies in the total assets. Slower growth is usually observable for value companies in the later stage of the business in which they create the most operating cash flows.
It was previously found in academic research that value companies tend on average to outperform growth companies over the long term.
Asset Growth – Lower Is Better Signal
This signal ranks stock according to their asset growth. This allows to identify and purchase stocks that are ranked with the lowest asset growth and (if applicable) short-sell stocks that are ranked with the highest asset growth.
Each day we calculate the asset growth by taking the company’s last available total assets (from the Balance Sheet) and dividing it by the previous year’s total assets (also from the Balance Sheet). If the denominator is zero or negative (very unlikely), then this signal is NULL.
Later stocks are ranked with a score of 10 to 0, with 10 having the lowest asset growth to 0 having the highest asset growth.
Data Scope & Range
Asset growth is calculated daily for over 6,000 stocks in the historical database.
TipRanks calculates asset growth from January 2011 to the present day.