Markets & Finance

Smart Picks from the IQ List


By Michael Kaye, CFA Standard & Poor's offers a number of investing tools to help investors make smart decisions. Our offerings cover a range of analytical approaches, including qualitative, quantitative, and technical. And we've also developed a "metric of metrics" that combines four different investing models incorporating our proprietary analytical products. It's called Investability Quotient (IQ), and it's a way to rank stocks according to their potential for medium- to long-term return.

S&P's IQ model combines models using proprietary analytical tools, technical measures, liquidity and volatility indicators, and quantitative analysis to come up with a total score. Under the IQ system, companies are scored on a scale of 1 to 250 -- similar to the standard measure of human intelligence -- with the higher numbers signaling stronger potential.

The IQ model is a combination of four different sub-models:

An S&P proprietary model based on

STARS ranking, quality of (

earnings and dividend), and an outfit's

credit rating;

A proprietary, multi-factor statistical model that includes valuation, profitability, risk, and momentum factors.

A

liquidity and

volatility model that measures liquidity and downside risk.

A technical model that looks at six-month

relative strength.

The following are the 10 companies with the highest S&P IQ score (in descending order):

Smarter than your average stocks

Company/ticker

S&P STARS Rank

S&P IQ Rank

Anheuser-Busch (BUD)

5

183.0

Lehman Bros. (LEH)

5

168.0

Alberto-Culver (ACV)

5

166.5

Black & Decker (BDK)

5

158.5

MBNA Corp. (KRB)

4

155.5

Lennar (LEN)

5

148.0

Gannett (GCI)

5

140.5

Exxon Mobil (XOM)

5

140.4

Bank of America (BAC)

5

139.0

Sysco (SYY)

5

130.0

Kaye is a portfolio services analyst for Standard & Poor's


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