Every Monday morning, I wake up to run financial models and look for new opportunities in the market.
None are as powerful as the one I’m about to show you…
I use a lot of metrics to identify the perfect stock. Sometimes I’m looking at price-to-tangible-book value. If the price-to-book is less than zero, I’m interested. This means that the stock is worth less than the sum of its parts. If a stock is trading at 0.5 times its tangible book value, it means that it is deeply undervalued.
If you own that stock and the company is liquidated tomorrow, you could make 100% on your money.
But let’s make one thing clear: With the Dow floating above 26,000 it’s harder and harder to find can’t-miss stocks that are about to take off like a rocket.
That’s why I started sorting through the massive universe of publicly traded companies by looking at just one number.
Today, I’m going to show you how I use the VQScore to unlock these potential gains, including a stock I found with 114% upside potential…
How the VQScore Works
The VQScore system tracks the 1,500 most profitable companies on the market and assigns each one a score ranging from 1 to 4.75. To get the score, we use a proprietary calculation that hones in on stocks with the potential to break out to the upside.
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This calculation is a blended analysis of a company’s underlying earnings power, its profit growth, and its EPS acceleration or deceleration. Then we balance the result against recent demand for the company’s shares.
A VQScore of 4 or higher puts a stock in the “Buy Zone.”
But I like to take it one step further to find the perfect stock.
What I Look for in a VQScore Stock
To be successful in trading, you need to have an inside edge. You need to have a system or a series of metrics that can help you see the world differently than what other traders perceive. I like to use the VQScore because it acts as a bit of a contrarian indicator at times.
Not only are highly rated companies profitable, but the VQScore allows me to identify breakout stocks in no time.
On Monday, I downloaded a list of stocks with a VQScore of 4.45 or better.
There are almost 15,000 stocks around the globe to choose from, and this system drills my opportunities down to the top 1% of stocks.
Once all that work of evaluating all these balance sheets to find profitable companies is done for me, I can get to work.
Let me show you a company – right now – that I identified using the VQScore.
Not only is it flying under Wall Street’s radar right now, it could double your money…
My Top VQScore Stock to Buy Right Now
Looking at the universe of VQ Stocks right now, the one that intrigues me for the long term is a company called Teck Resources Ltd. (NYSE: TECK). The Canadian firm is a diversified mining operator that produces copper, steelmaking coal, zinc, and other energy commodities.
Naturally, this is a stock that fluctuates on supply and demand for these commodities. In times of economic expansion, demand for copper and steel is high. In times of uncertainty, it can fall, in some cases, well below a rational value.
Teck has a perfect VQScore of 4.75. But it also checks off all the three boxes I’m looking for in a stock.
First, I like it when a company is stable financially.
Teck has a Piotroski F-score of 8, which signals that it is growing its profitability without relying on debt, balance sheet shenanigans, or other tricks to increase its margins. A perfect F-score is 9, so an 8 checks the box.
Second, I like to see the company return cash to its investors via dividend, no matter how small.
Teck Resources pays a 0.65% dividend yield. It’s not much, but it’s enough to show the board’s commitment to paying its shareholders for their investments.
Third, I like to see a company have control of its debt.
I look at another “score” that determines the company’s likelihood of bankruptcy. In this case, Teck has some debt, but major service dates don’t happen until early in the 2020 and 2040 decades.
I like potential buyout candidates too. I look at an enterprise multiple under 10. This multiple is one used by private equity funds and M&A analysts to ensure they are paying a fair price for the company. The enterprise multiple is currently sitting at 4.45, which means it’s cheaper than most of its peers and an attractive takeover play for other firms.
In fact, Teck is trading at 0.76 price-to-tangible-book value. That means that if the company’s assets were liquidated, shares would be worth 31.5% more than the current levels.
Finally, it’s important to look at the price to free cash flow. I’m interested in a firm that is trading at a price to CFC under 10; the company is trading at 9.
The VQScore is the first tool I use. And from there, I drill down to find a stock that is ready to break out over the long term. Teck checks all of those boxes.
Although it is a foreign company, susceptible to geopolitical risk, the combination of these fundamentals with the possibility of a peace deal between the United States and China makes this story a perfect storm for profit.
That’s why Wall Street analysts are giving it price targets 70% higher than its current share price of $23.15. But I think that’s too conservative for this stock.
Comparing Teck’s P/E ratio, price-to-tangible-book value, and price to cash flow to the industry average shows the stock is severely undervalued. According to my back-of-the-envelope calculations, Teck could pop by 114% once it breaks out.
His Winning Track Record Reveals Best Way to Beat This Volatile Market
2018 was one of the worst years for stocks since the 2008 financial crisis… but that didn’t faze Tim Melvin a bit.
He joined our team with an undefeated record (he was the ONLY guy in the industry we could find with one).
Coming in hot with 119 trades and 0 realized losses, he didn’t give a hoot what the market was doing. He was too busy making money.
And he’s finally decided to share his secrets with you.
He’s revealing his next trade recommendation on Monday morning. You don’t want to miss this.
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