When sourcing investment ideas, we utilize an investment system that replicates the strategies of great investors and other time-tested approaches through a set of computerized strategies, explains Justin Carbonneau, editor of Validea.
From Warren Buffett to Peter Lynch to Ben Graham, great investors have shared their investing knowledge and wisdom and our expertise is uncovering these investment strategies and extracting the precise fundamentals used to construct each one.
The more of our strategies that score a stock highly, the better the stock looks from a fundamental standpoint. As of this writing, there are less than 20 stocks in the market that score over 80% from at least eight of our fundamental models.
Equinor ASA (EQNR) a Norwegian state-owned multinational energy company is our Top Pick for conservative investors for the coming year. Energy stocks have gone from being the market’s redheaded stepchild to one of investors’ top choices in 2022.
Energy, and specifically the price of oil, is impacted by the macro related dynamics happening around the world, which can make investing in energy plays somewhat difficult and is why investors should look for conservative equity plays in the energy patch. Equinor ASA fits the bill.
While the majority of the firm is owned by the government of Norway, a little over 30% trades in the public markets. At the time of this writing, 9 of our models rate the stock 80% or better based on the fundamentals.
One of the models that rates the stock 100% is a conservative stock model that looks for low volatility stocks with high net payout yields (dividend + buy back yield) and strong price momentum. The stock’s "12 minus 1 month return" is 35%, ranking it in the 7th percentile in our database, and its net payout yield is 5%, ranking it in the top 17% of our database.
The combination of those two criteria gives the stock a final rank in the top 2% of all stocks in our system. The stock carries a 4% dividend, so you get a nice stream of cash coming in, and the shares trade at multiples well below that broader market at the current time.
With a market cap of over $118 billion, this stock offers investors a good way to play the strength in energy. And with backing of the government of Norway you can feel safe this company will be around and in business for a long time.