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In periods of economic uncertainty, businesses from all sectors can be affected and it can be difficult to get a sense of where stock markets are heading next...
The good news is that there are strategies that can guide you through these periods of uncertainty - and help you take advantage of opportunities that the market has to offer.
One of those is known as 'factor investing'. Well-researched, proven drivers of stock market profits can help to point you in the direction of the types of shares which, at least statistically, have the potential to outperform. Based on three influential 'factors', JZ Capital Partners (LON:JZCP) could be worth investigating...
Choose high quality over junk
Over the years, finance academics and market professionals have reached a consensus about what really makes some stocks perform well (and others perform badly).
Their studies of stock market data have found there are three factors that tend to show up time and time again. The first one is Quality...
Companies with a track record of profitable growth, high efficiency and solid finances, have been shown to be better bets on average than low quality, loss-making firms.
By our calculations (which use a range of financial quality metrics) JZ Capital Partners has a Quality Rank of 78 (where zero is poor and 100 is excellent).
Opt for cheap over expensive
Another well-research observation is that attractively valued shares tend to outperform expensive shares on average over time. So it's important to look at Value and whether a company is being fairly priced relative to what it earns, owns and what it pays out.
By our calculations (which look at several valuation metrics) JZ Capital Partners has a Value Rank of 91.
Look for a positive trend
It's easy to think that Momentum is only a measure for technical traders, but research once again shows that recent trends in both price and fundamentals can be a strong hint about the future. In the market, trends tend to persist, so it makes sense to look for stocks that are on an upward trajectory.
By our calculations (which look at both price and earnings momentum) JZ Capital Partners has a Momentum Rank of 86.
Overall, there are signs here that JZ Capital Partners has above-average exposure to three important drivers of stock market profits...
What does this mean for potential investors?
Good quality shares that are well priced and rising in the market have very broad appeal. But there are no guarantees. Finding bullet-proof shares is difficult - and we've identified some areas of concern with JZ Capital Partners, which you can find here. Knowing the warning signs and being aware of weakness is essential if you're going to preserve your wealth.