A Quick “Alpha Score” Teaser Answer

By Travis Johnson, Stock Gumshoe, January 27, 2015

I’ve had several folks writing in about the “Alpha Score” that the Profitable Trading folks are selling in a service called Alpha Trader. This is a technicals-driven service, and I’m no market technician or chart-expert, but they also did tease a specific stock that they say is hitting a good “Alpha Score” … so that, at least, we ought to be able to find for you on this snowy day in New England.

The “Alpha Score” itself seems to be some combination of relative strength and price/cash flow or free cash flow — combining a technical/momentum indicator with one of the better fundamental indicators (cash flow is much harder to fudge than earnings). I don’t know what the numbers mean that they pitch around, but it’s some sort of score, a percentile or ranking, assigned by these numbers (with each having a possible score of 0-100, so a max “Alpha Score” of 200).

I don’t know exactly what it means, and I do very little thinking or reading about technical trading or quants, but the person that Profitable Trading hired to add this “Alpha Score” magic to their service appears to be Tom Vician, who does have his own website here and a blog here with some basic info on his strategies and ideas.

But what is the specific stock hinted at in the teaser ad today? Here are our clues:

“… the Alpha Score just alerted me to a new small-cap leader you’ve probably never heard of. This company doesn’t do anything flashy. In fact, most would call its business boring. It makes thermal and acoustical barriers for car engines and insulating and filtration products.

“Like I said, boring. What is exciting is the firm’s profitability.

“This company prints money hand over fist, as evidenced by the earnings and revenue growth of the past four quarters.

[They show a graph of earnings and revenue growth this past year, all strong — including 59% earnings growth on 37% revenue growth in the third quarter of 2014]

“Its Alpha Score of 166 places it in the strongest 6% of all companies based on this proprietary indicator. These are the kinds of market-leading stocks the Alpha Score helps find before everyone else catches on.

“With the small-cap sector showing renewed signs of life, now is the time to position your portfolio in leading stocks. A rising tide lifts the strongest boats the quickest.”

So who is this? Lydall (LDL)

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And no, I don’t know why it has a high “Alpha Score” — but it is in that “boring” business they teased, and it has sales and earnings growth that exactly match the teaser pitch. It has been falling a bit this year, and cash flow and earnings have both generally been improving in recent years (though 2013 was not a great year, 2014 was very good). They’re small (market cap near $500 milion), they trade at a forward PE of about 15 (though that’s from only two analysts), and they’ve beaten estimates in each of the past four quarters.

With that, I’m off to shovel some white stuff — let us know if you think Lydall is interesting (or not), or if you have any insight into the chartist stuff the Alpha Trader folks are touting. It’s not my thing, but that doesn’t mean it mightn’t work. Enjoy!


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AllanTrends
Irregular
๐Ÿ‘74

I took a look at LDL’s chart and there is nothing there to spark my interest. That doesn’t mean it won’t perform well going forward, it just means that the stock is stuck in a trading range between 25-30 and unless you are short term timing those peaks and trough, forget making any money. Speaking of which, if there were a way to post my charts in these comments, I’d love to show my charts and why I like or don’t like technical patterns. I maintain a Public Chart library at my website, but it takes a good pattern to… Read More ยป

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Alan Harris
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Alan Harris

Hi Allan: Ive long been tempted to bone up on charting but there seem so many conflicting ways to analyse a chart and Ive never quite found the time. In your experience, scale of 1-10, how reliable are signals?

Slick Rick
Guest
Slick Rick

I subscribed to Alpha Trader because of their 60 Days “No Questions Guarantee” 100% Money back guarantee. As the 60 days neared I decide to email them and ask for my money back. NO RESPONSE , so I called their hotline number but always received message ,” Helping other customers, but leave number and we will get back to you as soon as possible !” NEVER received a call back so I thought to myself……. SCREW this and contacted my credit card company ….and jus a day day later said they would issue a refund back to my card. !… Read More ยป

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Lee
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Lee

hello, new Gumshoe Lee here. I was all set to join Alpha, you saved me, thanks… Although that stock with the Patented additives cure, for all our Diseases @ $8.00 is very interesting.. Did you get that info from them…

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Alan Harris
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Alan Harris

Id guess it was Thinkolated….youll soon get the idea. ๐Ÿ™‚ Welcom aboard Lee

hipockets
Member
๐Ÿ‘1218

FWIW – Second Opinion (a report available on Scottrade accounts) reports weekly on TA signals. Here’s last Friday’s analysis: Stock shows Mildly Deteriorating Conditions. SCORE = -2 if you are long, hold current position. Do not initiate new position. Stock is Not a Short Sell Candidate. Moving Average Convergence/Divergence (MACD) indicates a Bearish Trend. Chart pattern indicates a Possible Trend Reversal. Relative Strength is Neutral. Up/Down volume pattern indicates that the stock is under Distribution. The 50 day Moving Average is rising which is Bullish. The 200 day Moving Average is rising which is Bullish. Look for Support at 26.66.… Read More ยป

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Dave
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Dave

Barchart.com says:
Short Term Indicators Average: 40% Sell
Medium Term Indicators Average: 25% Sell
Long Term Indicators Average: 0% Hold
Overall Average: 32% Sell

Price: 28.85
Support: 28.04
Pivot Point: 28.85
Resistance: 29.66

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TheMerlin
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TheMerlin

Where is this TA Signals on Scottrade?
Also, I once tried using one of those coincidence indicators from one of the older advisories. Where you look at MACD, Stochastics and RSI. When they all converge you buy.
Well I watched and watched and one day I bought. Lost my shirt.

Harry
Guest

I subscribe to it and they’ve impressed with their
Stevia play and the Maserati gig coming up.
But he’s trying to get stuff in for you the customer
So you can make money as if you were a venture
Capitalist. I like the approach and I’ve made dough with him. He really does give up the stocks to the customer I think! It’s one of the better ones I think!

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harry1215
Member
๐Ÿ‘1
harry1215

I have been a member form a few months, BUT I always click to save my login info. BUT only 1 out of ten times does it have my info??? Why offer to save my login info if all the screens seem to be independent? Please fix that.

SoGiAm
Member
๐Ÿ‘11387

Welcome to the Gummune Harry1215. Re:Login-Thank you for the question and Travis for the rapid reply. Harry, Travis has created a thread that may be of valuable assistance in your investing journey and experience at StockGumShoe: http://www.stockgumshoe.com/2014/11/first-steps-and-favorite-tools-for-new-investors/ Best2You-Ben