3 Stocks to Plug into the Risk Rater Right Now
Welcome to Altimetry's Risk Rater.
With more than 4,500 companies analyzed and catalogued, you can see everything you need to know about the hidden risks that might be looming in your favorite stocks.
The Risk Rater issues grades for a company's accounting risk, credit risk, and its management confidence risk. You can quickly find out if a company is in the clear... or if under the surface, it's a ticking time bomb.
Here's how it works...
- If the Risk Rater gives a stock an "A" grade, then the stock looks safe for all three of the most common risks.
- If the Risk Rater gives a stock a "C" grade, then the stock doesn't have any big headline risk... but it doesn't have the perfect health grade you'd want in order to be really bullish.
- If the Risk Rater gives a stock a "D" grade or lower, then the stock could blow a hole in your portfolio if you're not careful.
The Risk Rater brings together some of our most powerful proprietary data. Our institutional investors have paid us as much as $100,000 per month to keep their investments safe using these insights.
We check all the "deadly accounting sins"... signs a company might be playing accounting games that could leave you holding the bag on an Enron-level crash.
We examine credit risk and whether the company will have problems paying its debt. Risks like these could send your investment tumbling fast.
And we use special tools – originally developed for one of the biggest spy agencies in the world – to look at how confident management really is in the business.
Data like this has helped us keep investors away from many epic investment torpedoes.
The Risk Rater is keeping an eye on all of these risks... and without getting too far in the weeds today, what it's seeing has us worried about the market right now.
We'll talk more about what we expect from here at our special event on Wednesday, September 27 at 8 p.m. Eastern time.
Here's just a snapshot of the losses our system has helped investors steer clear of:
For almost 30 years, I've been poring over financial statements to get to the bottom of real corporate earning power. I've seen firsthand how Wall Street focuses on getting its corporate clients rich – and how it couldn't care less about the average mom-and-pop investor.
That's why, after the 2008 crash, I gave my regards to Wall Street and created a new way of looking at stock analysis.
Until Wednesday, September 27 at 8 p.m. Eastern time, I'm giving you access to my Risk Rater... so you can see for yourself the power of having this data at your fingertips.
Here are just three stocks that we wanted to show you...
Stock No. 1: Centene (CNC)
If you type this stock into the Risk Rater today... you'll see a lot of green:
Centene is a managed-care company. It provides health insurance through the government's Medicaid program.
Investors are always worried that Centene's business will vanish if the government stops supporting Medicaid. After all, it's often a point of contention in Congress and at statehouses around the U.S.
However, our Risk Rater shows management isn't concerned about that risk. The company's management team has been very bullish about the outlook for Centene on recent earnings calls. These folks don't see a looming disaster.
On top of that, the company has no credit risk. It won't have any issues paying its debt for the next five years and beyond. And the Risk Rater sees no accounting risk... meaning the company won't have to restate its financials anytime soon.
In short, Centene gets a clean bill of health when it comes to risk. That might mean an opportunity for outsized gains when investors catch on.
Stock No. 2: CME Group (CME)
If you were to type one of the United States' greatest monopolists into the Risk Rater, you would get a "C":
After more than 100 years in business, CME has proven its staying power. It operates exchanges that are the center of the interest rate, foreign exchange, and commodities markets, among others.
CME dominates the markets where its exchanges operate. As a result, its Uniform return on assets ("ROA") is consistently near the top of our rankings,
Investors are bullish on this stock. It currently trades for a 25 times Uniform price-to-earnings ratio... above the 20 times corporate average.
However, a glance at the Risk Rater shows that skies aren't as clear as we'd expect them to be...
To justify its Uniform P/E ratio, you'd expect to see a management team that was giddy about CME's outlook. Instead the company gets a "C" for Management Sentiment risk. The team's feelings toward CME's near-term outlook can be described as lukewarm at best.
The company doesn't have serious accounting risk... but its Credit Rating risk score is only a "C." It's teetering on the edge, barely an investment-grade credit rating. There's not a lot of room to move before it would tip over to high yield.
If it did, that would put a dent in part of the bedrock of U.S. markets.
Stock No. 3: Array Technologies (ARRY)
Type solar-equipment maker Array Technologies into the Risk Rater, and the warning lights flash red across the board:
The market is over the moon for this clean-energy stock. Investors are betting its solutions will help make solar energy more efficient... meaning an explosion of cash flows for Array.
And yet, Array gets failing grades for all three risk categories.
The company's short accounting history means we can't be sure there's nothing fishy going on.
Plus, it gets a solid "F" for its credit risk, as it's a high yield credit. For it to keep growing, it'll need easy access to credit... and a poor credit rating will likely make it difficult. Even worse, it could be a sign of a bigger refinancing issue for the company.
While investors are giddy about Array's outlook, management has a lot less confidence in its own rosy promises. The company gets a "D" for Management Sentiment risk.
If you own Array, get out while you still can.
Our Special Event on SEPT. 27
My team and I have been paying close attention to a number of major risk factors... and we're as concerned about the market as we have been at any time in the past 15 years.
The Risk Rater highlights key risks for more than 4,500 publicly traded. I don't believe it's an exaggeration to say this data is vital for navigating today's market.
That's why we're holding a special event on Wednesday, September 27 at 8 p.m. Eastern time.
We'll walk you through the headwinds that have us so concerned for the market... and I'll talk about the one strategy the smartest investors in the world turn to when we see signs like these.
This strategy has led some investors to double- and even triple-digit gains... while many stocks were tumbling in the last recession. Better yet, one of those investors will join me at the event.
Be sure to check your email on Wednesday, September 27 at 8 p.m. Eastern time. I look forward to seeing you there.
Regards,
Joel Litman
Chief Investment Strategist, Altimetry
September 2023
