Written by: Robert and Russell Markham
For an ASX listed share to be given Super Star status, VectorVest requires it to demonstrate outstanding performance over a period of many years.
So, how can we use VectorVest to identify Super Star Stocks?
Price performance is one possibility, but as we have seen in the past, hype from market commentators and company stakeholders can talk up the price of an undeserving stock with bad fundamentals, think of the Tech Bubble in 1999-2001!
In the world of business, making money is the key measure of performance. But making money is not enough to qualify a stock for Super Star status.
Companies which consistently generate higher and higher earnings at consistently high growth rates over a period of years are the ones that create Super Star Stocks.
This requires a rare combination of outstanding management, quality products and exceptional services.
For a stock to qualify as a Super Star Stock, VectorVest AU requires it to have a Relative Safety (RS) of 1.25 or more, a Relative Value (RV) of 1.25 or more and a forecasted earnings growth rate (GRT) of at least 20% per annum (pa).
As of 27 November 2017, from the handful of stocks that met these stringent requirements, there are three that stand out over a 5-year period in our VectorVest Australian database of nearly 2000 shares.
Table 1 shows 3 Super Star stocks ranked by Value-Safety-Timing (VST). You will note that none of these are big-cap household names.
*Values above 1.00 for RV and RS are favorable.
Each of the companies listed in Table 1 also have strong upside price appreciation potential, as reflected in a high Relative Value (RV). They have outstanding long-term records of financial performance, as shown by consistently high RS values, over 1.20, for a significant period of time and they are in strong upward price moves. They all have GRT of 20% pa or more. Because of their super performance, they are all rated either a Buy or Hold. They are all Super Star Stocks!
Because I am also interested in dividend paying stocks, I decided to look at the Dividend Safety and Dividend Growth outlook for these shares. No surprise to see exceptionally high ratings. To study these stocks further, go to Viewers, then Stock Viewer, go to the Find Symbol(s) box at the top of Stock Viewer, put each of the stock codes into the box and hit Enter to bring up the selected stocks. You may wish to look at the 5-year graph of each share.
A QuickTest of these 3 stocks from 27 November 2012 to 27 November 2017 shows a gain 462.19% compared with the VVC/AU gaining 29.61% over this period.
Looking for more Super Star stocks? Click HERE to Try VectorVest today!
P.S. The information in this essay is based on Chapter 18 of “Stocks, Strategies and Common Sense” written by Dr. Bart DiLiddo and adapted specifically for shares listed on the ASX.