2. Good Ratings and Research Analysts

A research analyst is a professional who prepares investigative reports on securities or assets for in-house or client use. Other titles for this function include securities analyst, investment analyst, equity analyst, rating analyst, or simply "analyst". The report an research analyst prepares entails the examination of public securities records of companies or industries, and often concludes with a "buy," "sell," or "hold" recommendation.

A price target is an analyst's projection of a security's future price. Price targets can pertain to all types of securities, from complex investment products to stocks and bonds. When setting a stock's price target, an analyst is trying to determine what the stock is worth and where the price will be in 12 or 18 months. Research analysts generally publish their price targets in research reports on specific companies, along with their "buy", "sell", and "hold" recommendations for the company's stock.

From the book "THE INTELLIGENT INVESTOR" written by Benjamin Graham: "The intelligent investor will pay attention to the advice and recommendations received from investment banking houses, especially those known by him to have an excellent reputation; but he will be sure to bring sound and independent judgment to bear upon these suggestions—either his own, if he is competent, or that of some other type of adviser.".

Let´s consider the 'Price Target' as the price target indicated by a research analyst for a given stock and the 'Potential Growth' as the appreciation that this stock could eventually achieve in the current quarter based on its price target. The 'Potential Growth' value is calculated by the formula: (('Price Target' - 'Last Earn. Close Price') / 'Last Earn. Close Price') * 100, where 'Last Earn. Close Price' is the close price on the day of the latest earnings announcement. If the results are released after the market closes, we should consider ‘Last Earn. Close Price' as the closing price on the day following the day of the last earnings announcement.

We will only consider eligible for trading the stocks that have a 'Potential Growth' value equal or greater than 15%.

All of the ratings and research analysts listed in the tables below 'RATINGS' and 'RESEARCH ANALYSTS' are considered good indicators when analyzing a stock.

If one of the good research analysts listed in the table 'RESEARCH ANALYSTS' gives a stock a good rating, indicating a price target that is considerably above the close price on the day of the latest earnings announcement, and if it is also confirmed that all fundamental indicators and metrics are favorable, then we can consider that the stock has growth potential for the current quarter.

In short, only stocks that meet the 4 conditions indicated below will be considered illegible for trading:

1. Have all fundamental indicators and metrics with favorable values.

2. Are recommended at least by one of the good research analysts listed in the table below 'RESEARCH ANALYSTS';

3. Have a specific buy recommendation (“Buy”, “Strong Buy”) or that are expected to perform slightly better than the market return (“Outperform”, Overweight, “Above Average”). All these good recommendations are listed in the table below 'RATINGS';

4. Have a 'Potential Growth' value equal or greater than 15%.

Sources:

- What Is a Research Analyst? What They Do and Qualifications, accessed 23 June 2024, <https://www.investopedia.com/terms/r/research-analyst.asp>

- Price Target: How to Understand and Calculate Plus Accuracy, accessed 23 June 2024, <https://www.investopedia.com/terms/p/pricetarget.asp>

- Benjamin Graham, THE INTELLIGENT INVESTOR, Fourth Revised Edition, accessed 23 June 2024