The Quality Dimension of Value Investing

Stocks from the Novy-Marx Screen

Join Stock Rover and you will automatically get a Watchlist we created consisting of 25 stocks based on the research published by Robert Novy-Marx, an assistant professor of finance at the Simon Graduate School of Business at the University of Rochester, New York, and a faculty research fellow of the National Bureau of Economic Research.

The research was highlighted in an article in the Wall Street Journal, published on March 1st 2013. The original research article can be read here.

The research highlights selecting stocks that exhibit quality (based on gross profit relative to total assets), value (based on price to book) and momentum (based on the last 11 months price performance of the stock). This approach has generated returns in excess of the S&P500 with less volatility.

The following is a chart showing the performance of the top 25 stocks that passed the quality screen over the last year relative to the S&P 500.

25 Quality Stocks vs. the S&P 500