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Stock Investment Ratings |
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| Rating |
Definition |
| A (Buy) |
Excellent. The company's stock has an excellent track record for providing strong performance with minimal risk, and it is trading at a price that represents good value relative to the company's earnings prospects. While past performance is just an indication - not a guarantee - we believe this stock is among the most likely to deliver superior performance relative to risk in the future. Although even the best stocks can decline in a down market, Wall Street analysts interpret our "A" rating as a "Buy". |
| B (Buy) |
Good. The company's stock has a good track record for delivering a balance of performance and risk. While the risk-adjusted performance of any stock is subject to change, we believe that this stock is a good value, with good prospects for outperforming the market. Although even good investments can decline in a down market, Wall Street analysts interpret our "B" rating as a "Buy". |
| C (Hold) |
Fair. In the trade-off between performance and risk, the prospects for the company's stock are about average based on its track record and current valuation. Thus, we feel it is neither a significantly better nor a significantly worse investment than most other common stocks. Wall Street interprets this rating as a "Hold". |
| D (Sell) |
Weak. The company's stock is an underperformer relative to other common stocks with a similar amount of risk. While the risk-adjusted performance of any common stock is subject to change, we believe that this stock represents a poor investment based on its current valuation and the company's current financial position. However, Wall Street interprets our "D" rating as a "Sell". |
| E (Sell) |
Very Weak. The prospects for the company's stock are not good, with significant downside risks outweighing any upside potential. This opinion is based on the company's current financial condition in combination with the stock's historical risk-adjusted performance and current valuation. While the risk-adjusted performance of any stock is subject to change, we believe this stock is a poor investment risk. Even some of the weakest stocks can rise in certain market conditions. However, Wall Street interprets our "E" rating as a "Sell". |
| F |
Bankrupt. Our F rating means that the company issuing this stock is currently in bankruptcy proceedings, and that it remains under active coverage. The decision to retain bankrupt companies' stocks under active coverage is based on factors such as data availability and quality, and is made on a discretionary basis. Typically, shareholders in a bankrupt company lose their entire investment when the company emerges from Chapter 11 reorganization or liquidates under Chapter 7. Therefore, we feel this stock has substantial downside risk for investors and very little, if any, upside potential. |
| + |
The plus sign is an indication that the stock is at the upper end of the letter grade rating. |
| – |
The minus sign is an indication that the stock is at the lower end of the letter grade rating. |
| U |
Unrated. The stock is unrated for one or more of the following reasons: 1) It is too new to make a reliable assessment of its risk-adjusted performance. (Typically, a stock must have traded for at least one year before it is eligible to receive a Weiss Investment Rating.); 2) Quarterly reports filed with the SEC were either late or missing critical items that Weiss Ratings deems necessary for a thorough analysis; 3) Data anomalies exist that call into question either the accuracy or completeness of the information presently available to Weiss Ratings. |
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The Weiss Investment Ratings represent a completely independent, unbiased opinion of a stock's historical risk-adjusted performance and value relative to the company's earnings prospects. Each stock's rating is based on two primary components: (1), its Performance Rating and (2), its Risk Rating.
A stock's Performance Rating is based on its total return to shareholders over the last trailing four years and its prospects for future returns based on sales, net income, earnings trends and economic factors. Additionally, credit is given for relativley low valuations (i.e. price to earnings, price to sales and price to book) based on the stock's current price.
Returns and trends are weighted to give more recent performance a greater emphasis. Thus, two stocks may have provided identical returns to their shareholders over the last four years, but the one with the better performance in the last 12 months will receive a slightly higher performance rating.
The Risk Rating is primarily based on the level of volatility in the stock's daily and monthly returns and on the underlying company's financial stability, as well as economic factors. Stocks with more volatility relative to other common stocks are considered riskier, and thus receive a lower risk rating. By contrast, stocks with very stable returns are considered less risky and receive a higher risk rating.
Likewise, companies with weak financial stability (e.g. those with high levels of debt) are riskier investments than those that are financially sound. Adjustments have also been made for stocks that appear to be overvalued at their current prices.
Based on our evaluaton of the investment, an individual performance rating and a risk rating are assigned to the stock. Then these measures are combined to derive the stock's composite Weiss Investment Rating. Keep in mind, however, that the overall rating is not a simple average of the risk and performance grades. Rather, it involves a dynamic assessment of how well investors have been compensated for the level of risk they have taken.
Rarely will you ever find a stock that has both a very high Performance Rating plus, at the same time, a very high Risk Rating. Therefore, the stocks that receive the highest overall Weiss Investment Ratings are those that provide the ideal combination of both primary components. There is always a tradeoff between risk and reward. That is why we suggest you assess your own personal risk tolerance using our Investor Profile Quiz as a part of your decision-making process.
Important: The Weiss Investment Ratings are not "buy" or "sell" recommendations like those issued by a brokerage firm. Rather, the ratings indicate our opinion regarding an investment's valuation level and prospective risk-adjusted performance relative to other similar-type investments. Any decision to buy or sell a stock, however, must also consider external factors such as the direction of the overall stock market and your personal financial situation.
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