The selection of equities, listed on NYSE and NASDAQ, is updated dynamically by machine learning at market closure every night
Stocks are screened for the strongest sales trends and capex (capital expenditures) growth
The selection is controled by constraints set on debt financing
Sales & Capex trends
The trends are powerful indicators to bolster a momentum trade
- As sales & capex will vary from quarter to quarter, moving averages may signal positive trends over time
- A moving average over the past 5 reported quarters is viewed as a positive by surpassing 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
To reinforce the focus, the selection is screened for increase in sales & capex of the latest quarter over the previous quarter
Debt financing
While growth will rely in part on debt financing, prudent constraints are set on leverage and current liabilities
- D/E leverage is constrained, arbitrarily, to 1.5 - limiting Long Term Debt to 150% of Equity
- Current liabilities, a preferred source of financing in the early stages of growth, is limited to 80% of Total Liabilities
The selection does not screen any specific range for performance or volatility but the assets are ranked to highlight short-term momentum
The Invesco NASDAQ 100 ETF