Latin Capital Market Stock Ratings
BUY Rating = This stock has the opportunity to appreciate and produce a total return of more than 20% over the next 12 months. The stock presents a generally favorable momentum, strength and expectations profile and purchasing it could provide exceptional returns.
HOLD Rating = This stock offers inconclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. The stock investment profile is mixed or the stock has already attained a valuation that reflects its profile.
SELL Rating = This stock is likely to decline by more than 20% over the next 12 months, with the risk involved too great to compensate for any possible returns. While the stock may have some speculative appeal on various profile aspects, it requires above average tolerance for risk and/or a longer time horizon to realize value.
The LatCAPM method projects a stock's total return potential over a 12-month period including both price appreciation and dividends. These Buy, Hold or Sell ratings designate expectations for how these stocks should perform against a blended benchmark of the S&P 500 index and an emerging market equity index.
The LatCAPM method requires each analyst to score a stock in three areas: momentum, strength, and expectations. The momentum score measures include analysis of the company’s real economic profit, net changes in shareholder equity and cash flow trends. The strength score considers among other things franchise value, profitability and financing self-sufficiency. The expectation score incorporates valuation metrics, new business growth, earnings estimates and management value-added. While the best stocks will consistently score well in all three areas, a company need not score well in all three areas to receive a BUY rating. Some level of uncertainty is expected in each analysts review and should be appropriately reflected in the discussion about the stock and its future outlook. As with any equity investment it is possible to lose capital when investing in stocks.
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