Why quality and value are the main drivers of Dart’s share price

Quality and value are two of the most important factors in determining returns in the stock market – yet many investors don’t take them seriously. In times of great economic uncertainty, using these two important factors when searching for stocks can help you navigate market volatility.

The Arrow The share price has moved by 59.7% in the last three months and is currently trading at 853.5. What is interesting about this stock, however, is its strong dependence on the key profit drivers good quality and a relatively favorable rating.

This is important because at a time when many investors are looking for cheap stocks, it is important to know the difference between a real bargain and a Value trap. The secret is that it is often the Quality the share that makes all the difference.

This difference can be seen here:

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Quality you can rely on

Good quality stocks are valued by the market because they are more likely to be solid and reliable companies. Profitability is important, but so is the financial strength of the company. A track record of improving finances is essential.

One of the outstanding quality indicators for darts is that it 5 of 9 Financial tests in the Piotroski F-Score. The F-Score is a top-notch accounting-based checklist for finding stocks with an improving financial health trend. A good F-Score indicates that the company has strong quality characteristics.

Buy at a fair price

While quality is important, no one wants to overpay for a stock, so an attractive valuation is also important. With a weaker economy, earnings forecasts are unclear across the market. However, there are some valuation metrics that can be helpful. One of them is earnings yield.

The earnings yield compares a company’s earnings to its market valuation (determined by dividing operating profit by enterprise value). It indicates the total value of the stock (including cash and debt), making it easier to compare different stocks. Expressed as a percentage, the higher the earnings yield, the better the stock.

A rule of thumb for a reasonable earnings yield might be 5%, and the earnings yield for Dart is currently 20.6%.

In summary, good quality and relatively low valuations are indicators of which stocks are most attractive to contrarian value investors. These stocks can be genuinely mispriced. Once the market realizes that these quality companies are for sale, their prices often recover.

Find the strongest stocks on the stock market

Finding high-quality stocks at attractive prices is a strategy used by some of the world’s most successful investors. If you want to find more stocks that meet these rules, you can find a comprehensive list on Stockopedia’s StockRanks page.