The selection of equities, listed on NYSE and NASDAQ, is updated by machine learning at market closure every night
The MidCap selection rules out below-average performance and high volatility
Stocks are screened for positive sales trends and cash generation
Sales
- As sales will vary from quarter to quarter, moving averages will signal positive trends over time
- A moving average over the past 5 reported quarters is a positive when higher than a 20-quarter (5-year) moving average
- The longer the trend in favor of the most recent quarters persists, the higher the score assigned to individual assets, screened for above-average ranking
Cash generated
- Cash generation is targeted as key factor to support future growth
- Disruptive firms, which generate little or no cash, are ignored, because their market potential and profitability remain uncertain
- Cash generation is measured by
- a positive cash conversion ratio - Cash from Operations (CFO) > Net Earnings
- above-average Free Cash Flow Yield, defined as FCF/EV, where EV is Enterprise Value = Market + Debt + Pref. Equity - Cash & Eq
The Vanguard S&P Mid-Cap 400 Growth ETF
Assets shown are ranked by high asset price momentum over the short term