In my previous article on stock selection criteria, I am using stock grading system as advocated by Infinite Wealth, which is basically based on fundamental analysis. According to Infinite Wealth grading system, a stock with grading of 9 stars and above is worthy of investment. A quick recap on the stock grading system is as follow:
- Turnover
- Net profit after tax (Net PAT)
- Net profit margin (NPM)
- Cashflow from operation (Cashflow Ops)
- Cash ratio (= Asset/Liabilities)
- Average net dividend yield (Net DY)
- Average ROE (ROE)