One stock analysis system worth keeping a close eye on is Share Maestro. It uses a range of fundamental measures to identify both stocks that are cheap and expensive – the system calculates the future value (in five years time) of a share using the following process.
1. The accumulated value of reinvested dividends is calculated and added to this price to determine the future value of the investment.
2. The future value of the investment is discounted by the risk premium that compensates for the risk of holding the share instead of a virtually risk-free gilt.
3. The resulting risk-adjusted future value is discounted back to today's value using, as a discount rate, the current return on a five-year gilt (if held to redemption).
4. The resulting current value of the investment is then compared with the current market price of the share to see if the market price represents good or bad value. The current value is expressed as a percentage of the current market price. So 100 per cent represents fair value. Over 100 per cent shows the value is greater than the price and vice-versa.
The Share Maestro system calculates a range of buy/sell signals and it's now flashing a number of top sells, including the following FTSE 100 and 250 stocks.
Share Maestro's picks
| Share | Price (p) |
|---|---|
| British Airways | 168.8 |
| Schroders | 873 |
| Pennon | 491.25 |
| Randgold Resources | 4,218.00 |
| Smiths Group | 766 |
| Plus | |
| Marks and Spencer | 294 |
| Derwent London | 876.5 |
| Smith (DS) | 80.5 |
| Forth Ports | 1,064.00 |
| Michael Page | 259.5 |
| Helical Bar | 355 |
