! How I Find Lower Risk/Higher Reward Stocks
Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at twitter.com/CharlesRAAII.


RD Walker from AL posted over 7 years ago:

In Table 1, for the current ratio, the best score is given to a current ratio above 1.0 and below 2.0. Why isn't the best score for a current ratio above 2.0? Is this a typo, or am I missing something?

Charles Rotblut from IL posted over 7 years ago:


A current ratio above 2.0 requires additional investigation.

For example, a high current ratio can be a warning flag that a company has slowed payment of receivables (meaning its bills) or that inventory levels are rising. The current ratio can also be elevated by a high level of cash, which is a double-edged sword. A large amount of cash does provide flexibility, but if management uses the cash balance to engage in projects or mergers that adversely impact profitability, then shareholders will be harmed.


CSarahan from DC posted over 7 years ago:

I wonder what the author's return has been using this approach?

James from MA posted over 7 years ago:

This screen is interesting and I look forward to analyzing it further. However, it is good only in a context of top-down analysis of the market, it's sectors and it's industries. In order to reduce risk it is very important to know where investment money is flowing. A financially sound company is going down with the rest of the ships if investment money is moving out of company's industry or sector. It will just sink more slowly. Conversely, if money is flowing into it's industry it will rise more quickly than less sound compan ies.

Rein from MA posted over 6 years ago:

Can you make available the code for the stock investor professional?

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