Educational Programming Video
The Value Line Investment Survey - Small and Mid-Cap Edition
Program 3: The Ratings and Reports Page - Part 1
The Small and Mid-Cap Edition was introduced as the result of market research, which showed that Value Line Investment Survey subscribers were interested in information on more stocks, but they also wanted the information to be available at a relatively low price. The features and information offered in The Small and Mid-Cap Edition are very similar to what is provided by The Value Line Investment Survey-Standard Edition, but there are some differences. As a result we feel it important to review the specific details of what The Small and Mid-Cap Edition offers subscribers, even though you may be familiar with The Standard Edition.
In this session, we'll discuss items on the Ratings & Reports page. Let's begin by reviewing what is at the top of The Small and Mid-Cap Edition page.
The top of the page lists the company's name, ticker symbol and exchange. Note that The Small and Mid-Cap Edition companies are all traded on the New York Stock Exchange, American Stock Exchange or the NASDAQ National Exchange.
The recent price is listed in dollars, except when below $10.00 per share, then it is priced to the nearest tenth of a dollar. The trailing P/E ratio is shown to the nearest tenth.
When the ratio exceeds 99.9 or when earnings are negative, we show "NMF", an abbreviation for 'no meaningful figure'. Since we do not estimate Small and Mid-Cap Edition companies' future earnings, we use the latest 12-month reported results. The relative P/E ratio is the stock's trailing P/E ratio divided by the median P/E for all 3,500 stocks under review in both The Standard and Small and Mid-Cap Editions. A ratio of less than 1.0 identifies a company as potentially undervalued relative to our 3,500 stock universe.
The dividend yield is the current annualized cash dividend divided by the recent price and is expressed in tenths of a percent. The page number is also on the top right side of the page and is a four-digit number from 3,000 to 5,541. This contrasts to The Standard Edition page numbers that range from 100 to about 2,300.
Next, we show The Small and Mid-Cap Edition ranks. The PerformanceTM rank incorporates most of the elements of The Standard Edition TimelinessTM rank and has, as a group, successfully forecast relative stock price performance. Rank 1 stocks have outperformed the Russell 2000 index and Rank 5 stocks have mostly under performed the same. Subscribers should also note that since The Small and Mid-Cap Edition started in March 1995, the groups ranked 1 and 2 have performed similarly, but both have been substantially better than average. Based on this performance, investors would be well served to retain #1 ranked stocks that fall to #2. This would substantially reduce turnover with little sacrifice of performance and may improve portfolio performance due to lower transaction costs.
The Technical rank, based on a variety of recent stock price data, projects stock price performance relative to the overall market during the next three to six months. This Technical Rank is also a component used in deriving the PerformanceTM Rank.
The SafetyTM rank, derived from the stock's Financial Strength rating and Price Stability index, measures the total risk of a stock. Many small-cap stocks have a low price stability rating due to larger-than-average percent changes in the price of a company's own stock over the last 5 years.
Another measure of volatility is a stock's beta, listed just below the SafetyTM rank.
Beta is a relative measure of the historic sensitivity of the stock's price to overall fluctuations in the New York Stock Exchange Composite Index. A Beta of 1.50 indicates a stock tends to rise or fall 50% more than the NYSE Composite Index.
Financial Strength is a relative measure of a company's balance sheet strength and has nine steps from A++ to C. B+ is average.
Price Growth Persistence is a measure of the historic tendency of a stock to show persistent price growth compared to the average stock, and its ratings range from 100 (Highest) to 5 (Lowest). A score of 50 is average.
Earnings Predictability is a measure of the stability of a stock's earnings trend, with a similar ratings range of 100 to 5. Recent years quarterly earnings comparisons are weighted more heavily than earlier ones.
This ends our current session discussing the contents of the Small and Mid-Cap Edition page.
Again, thank you for visiting us here at ValueLine dot com. Have a prosperous day.