This New Constructs Model Portfolio includes stocks that earn an Attractive or Very Attractive rating and align executive compensation with improving ROIC.
Each month, we present roughly 15 Attractive-or-better rated stocks that tie executive compensation to improvement in ROIC. Stocks earn an Attractive-or-better rating when they have:
- High-Quality Earnings based on:
- Returns on Invested Capital that are rising; and
- Economic Earnings/Cash Flows that are positive.
- Cheap Valuations based on:
- Free Cash Flow yields that are positive:
- Price-to-Economic Book Value (EBV) ratios that are relatively low: and
- Growth Appreciation Periods (GAP) that are relatively low.
- The "Accurate ROIC Calculation/Strong Alignment with Exec Comp" Stocks
- The "Flawed ROIC Calculation/Strong Alignment with Exec Comp" Stocks
- The “Weak Alignment with Exec Comp" Stocks
- Additions for the current month
- Deletions from the prior month
- Performance of all stocks in last month's Model Portfolio