Why Value Line Portfolios?

Value Line’s Proprietary Ranking System Sets Us Apart  

We rely on the Value Line Timeliness & Safety Ranking System to rank stocks in terms of price performance and risk. 

Value Line Timeliness Ranks

This rank measures the probable relative price performance of approximately 1,700 stocks during the next six to 12 months on an easy-to-understand scale from 1 (Highest) to 5 (Lowest). 

The Timeliness Ranking System relies on actual, known data, including recent earnings and price changes, earning surprises and the 10-year trend of relative earnings and prices. Using all these elements, a model forecasts the predicted price change of each stock in the near future, relative to the other 1,700 funds in the ranking universe.  

Rank Quality Stock qualities, as a group
1 Highest Expected to be the best performers relative to the Value Line universe during the next six to 12 months (100 stocks)
2 Above Average Expected to have better-than-average relative price performance (300 stocks)
3 Average Expected to have relative price performance in line with the Value Line universe (approximately 900 stocks)
4 Below Average Expected to have below-average relative price performance (approximately 300 stocks)
5 Lowest Expected to have the poorest relative price performance (100 stocks)

Potential causes for changes in the Timelines Ranks include: 

  1. New earnings reports
  2. Changes in the price movement of one stock relative to the approximately 1,700 other stocks in the publication
  3. Shifts in the relative positions of other stocks
  4. Other factors

Value Line Safety Ranks

As well as Timeliness, a second investment criterion is the safety rank assigned by Value Line to each of the approximately 1,700 stocks. The Safety Ranks measure the total risk of a stock relative to the approximately 1,700 other stocks. This ranking is derived from a stock's Price Stability rank and from the Financial Strength rating of a company. Safety Ranks are also given on a scale from 1 (Safest) to 5 (Riskiest) as follows:

Rank Quality Stock qualities, as a group
1 Highest The safest, most stable, and least risky investments relative to the Value Line universe, which accounts for about 95% of the market capitalization of all stocks in the U.S.
2 Above Average Are safer and less risky than most
3 Average Are of average risk and safety
4 Below Average Are riskier and less safe than most
5 Lowest Are the riskiest and least safe

Why Safety Rank Matters 

Stocks with a high safety rank (1, 2) are often associated with large, financially sound companies. The downside: These same companies also often have less-than-average growth prospects as their primary markets tend to grow slowly or not at all. Stocks with low Safety Ranks (4, 5) are often associated with companies that are smaller and/or have weaker-than-average finances; on the other hand, these smaller companies sometimes have above-average growth prospects because they start with a lower revenue and earnings base.

Safety becomes particularly important in periods of stock market downswings, when many investors want to try to limit their losses. We believe that if you think the market is headed lower, but prefer to maintain a fully invested position in stocks, it's ideal to concentrate on stocks ranked 1 or 2 for safety while also, at the same time, trying to keep your portfolio ranked as high as possible for timeliness.

The Penalties and Rewards Associated with Risk 

We define a risky stock as one with low price stability and a price that fluctuates widely around its own long-term trend. One may reasonably assume that the price of a risky stock will go up more than that of a safe stock in a generally strong market. Yet, if in the interim it went down more sharply and you had to sell at an inopportune time, you could suffer a heavier penalty for having bought the high-risk stock instead of the safer one.

 

Do you have questions?

Please reach out to our SMA support team at:

Crystal Barrett

Crystal Barrett
Sales Director

Through decades of bulls and bears, Value Line's ranking systems have stood the test of time.

Data shows past performance, which is not indicative of future performance. Information contained herein has been prepared for illustrative purposes only. Although the information provided has been obtained from sources which EULAV Asset Management (EAM) believes to be reliable, it does not guarantee accuracy or completeness of such information. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security or product and are subject to change without notice. Equity markets are volatile and an investor may lose money. For a complete discussion of the risks involved, please see our ADV Part 2A (Brochure).

EAM acts as either a discretionary investment manager or a non-discretionary model provider in a variety of separately managed account programs. Any performance information included herein represents the performance achieved by EAM as a discretionary investment manager with trade implementation responsibility. Separately managed accounts are provided by EAM and are independent of the Value Line Funds.

Value Line, Value Line Logo, Timeliness, Safety are trademarks or registered trademarks of Value Line, Inc. and/or its affiliates in the United States and other countries. Used by permission. Third-party trademarks and service marks appearing herein are the property of their respective owners.