TP2400x272B

Liquidity (Q.i.) indicator identifies neglected (mis-priced) companies

We just added a new liquidity ratio to the screener.

Here is what it's all about....

Liquidity (Q.i) = Adjusted Profits / Yearly trading value

This ratio gives you an indication of how high a company’s yearly traded value per share is compared to its adjusted profits.

 

High value means low traded value

A high value thus means low turnover and thus a larger chance of the company’s shares being mis-priced.

To find companies with low traded value to profits set the slider to 0% to 20%.

A low value means a company if highly traded

A low value means high traded value which means more analysts may follow the company giving you a lower chance that the company is mispriced.

To find these companies set the slider 80% to 100%.

It can thus help you to identify companies with large controlling shareholders or a stable base of shareholders where traded value is low and thus less analyst interest because they cannot make money in the trading of the company’s shares.