While the financial crisis of 2007 spurred a lot of questions regarding the role that quantitative investment strategies played in the market’s drop, these strategies continue to evolve, writes Validea CEO John Reese in this week’s Forbes.
Reese gives an overview of the evolution of quant investing, which has been used for decades, and the more recent move toward incorporating big data. He points out, however, that there are concerns related to data accuracy and collection methods and emphasizes the fundamental, quantitative-based guru strategies behind Validea’s stock screening models. He offers the following high-scoring picks:
- LG Display Co. Ltd. (LPL) manufactures display panel technologies and earns high marks for consistent earnings-per-share growth and moderate price-sales ratio. The company also boasts a strong book-market ratio and healthy return-on-assets.
- Neustar (NSR) is a real-time provider of cloud-based information services. The company is favored for its earnings-yield and return-on-capital as well as its consistent growth in earnings-per-share and attractive price-sales ratio.
- HP (HPQ) is a major provider of personal computing devices, imaging and printing products with a healthy top line and positive cash flow-per-share, and the stock’s dividend yield adds interest.
- Nissan Motor Co. Ltd. (NSANY) manufactures and sells automobiles, marine equipment and related products and financing services. The stock’s book-market ratio and return-on-assets show well, and operating cash flow exceeds net income by a comfortable margin.
- Unum Group (UNM) is a disability insurance provider in the U.S. and U.K. and is favored for its stable debt level and hefty growth in return-on-assets over the prior year. Operating cash flow levels are a plus.