Stocks with a maximum Smart Score significantly outperform the S&P 500
Since the start of January 2022, the outperformance of top Smart Score stocks when compared to the S&P has increased by 15%, showing that they offer market protection
Choosing which stocks to invest in is difficult at the best of times. Even the most thorough research can result in confusion. Consider a stock that has positive technical indicators, yet company insiders are dumping it on the open market. Or a situation in which a CFO just snapped up millions of dollars worth of shares, yet top Wall Street analyst consensus on the stock is less than enthusiastic.
TipRanks created the Smart Score to give investors an easy way to gauge a stock’s potential. This is a data-driven score that evaluates a stock based on eight key market factors. Six of these are based on TipRanks’ unique data, and take into consideration Wall Street analyst consensus, whether hedge funds are buying or selling shares, what the companies’ insiders are up to on the open market, and the opinion of financial bloggers, as well as technical and fundamental indicators.
The score gives equal weight to each component. It’s presented visually, so you can quickly assess a stock. A score of 8, 9, or 10 is considered Outperform, a score of 4, 5, 6, or 7 is considered Neutral, and a score of 1, 2, or 3 is considered Underperform. The Smart Score chart also shows you how the stock is performing according to each of the components of the score. Click on a section to find more detailed information.
Smart Score Accuracy
Of course, the big question is, does the Smart Score work? How much can you rely on it in your stock research?
We’ve been tracking the performance of stocks with a maximum Smart Score of 10, going back to the beginning of 2016. Since this time, they have delivered a total return of 217.9%. Sounds good, but how does this compare to the indexes? Right now, Smart Score stocks have an alpha of 79.6% over the S&P 500. This is almost 15% higher than it was at the start of the year, showing that when the markets are volatile, stocks with a maximum Smart Score provide protection.
How Can I use the Smart Score in my Investing?
There are two ways you can incorporate the Smart Score into your stock research.
Firstly, you can use it as part of your stock analysis on TipRanks. For each stock you are researching, you can access its Smart Score.
Secondly, now that you know the power of stocks with a Smart Score of ten, you can search exclusively for these stocks on our Top Smart Score Stocks tool. As with all TipRanks tools, it’s simple to use and you can filter data according to your preferences.