I used Morningstar CPMS to backtest the strategy from January, 1999, to January, 2022, assuming an equally weighted 10-stock portfolio. Once a month, stocks were sold if they fell below the top 25 per cent of the index based on the above metrics, or if earnings turned negative. On this basis, the strategy produced an annualized total return of 14.5 per cent, while the S&P/TSX Energy TR index produced 9.9 per cent.
This article does not constitute financial advice. Investors are encouraged to conduct their own independent research before purchasing any of the investments listed here.Morningstar Research Inc. is a leading provider of independent investment research in North America, Europe, Australia and Asia. Morningstar offers an extensive line of products and services for individual investors, financial advisers, asset managers, retirement plan providers and sponsors, as well as institutional investors.
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