Top Stock Picks Based On AI: Beating the S&P 500 by 30%. Equity Curve Analysis and Portfolio Construction

Executive Summary

In this algorithm performance evaluation report, we examine the performance of a sample portfolio constructed on 3 days algorithmic forecasts for US stocks universe. The back-testing is performed on trading data spanning from January 1 to August 2 2019, while compared to the S&P 500 performance as benchmark. The results suggest that the stock market predictions generated by the I Know First AI Algorithm provided solid basis for portfolio strategy and provided 20.63% return implying 3.89% premium over the S&P 500 return of 16.74%.

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Winning Stock Forecast: The Brasilian Gol Transportes Aéreos (NYSE: GOL) Brings 20.93% In 3 Days

By Gol Airlines [Public domain], via Wikimedia Commons

GOL is a young company, established in 2000, serves more then 30 million passengers annually with 67 destination and 10 countries in South America and Caribbean. Moreover, it is a leading cargo transportation and logistics business serving more than 3,400 Brazilian municipalities and, through partners, more than 200 international destinations in 95 countries.

In the end of August 2018, as part of the strategic program to renew the equipment GOL welcomed the Boeing 737MAX, the first Boieng jet in history of the company. This aircraft will be used on international routes due to reduced fuel consumption. In one of the recent interviews Paulo Kakinoff (CEO GOL Airlines) stated: “Today is an exciting day for the entire GOL team, we are happy to welcome the 737 MAX 8. We can further improve our operational efficiency by flying a young, modern and safe fleet, while also lowering the cost of air travel and expanding our network to new international destinations”.

By Aka The Beav from Seattle, Washington (Flickr) [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

The Airline follows a low cost model Business. Its first competitor is Irish Ryanair, which follows the same model. In South America GOL is considered a pioneer in low cost rates. It implemented a loyalty program that customers appreciate (14 million subscriptions). The employees themselves are trained to think in terms of business goals and the pay structure includes various incentives. In just a few years, revenues have reached $1 billion. This explosive growth has come despite the global recession, rising fuel prices, high inflation and one of the worst recessions in the airline industry.

Source: MarketWatch

The I Know First Stock AI Algorithm predicted Gol Transportes Aéreo to go up by indicating strong signal and in 3 days the company showed outstanding performance of 20,93%. Below we provide the I Know First heatmap that was send to our clients:

 

Current I Know First subscribers received this bullish GOL forecast on October 12th, 2018.

To subscribe today click here.

Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster.

How to interpret this diagram

GOL Linhas Aéreas Inteligentes S.A. (GOL) provides scheduled air transportation services for passengers cargoes, and mailbags in Brazil and Latin America. The company operates through Flight Transportation and Smiles Loyalty Program segments. It also offers logistics services. In addition, the company offers Smiles loyalty programs with approximately 13.7 million members, allowing clients to accumulate and redeem miles. As of December 31, 2017, it operated a single fleet of 119 Boeing 737 aircraft and approximately 700 daily flights to 64 destinations in Brazil, South America, and the Caribbean. GOL Linhas Aéreas Inteligentes S.A. was founded in 2001 and is based in Sao Paulo, Brazil.

Winning ASNA Stock Forecast: Ascena Makes Major Gains Of 28.63% in 3 Days

These capabilities are key building blocks of our larger transformation roadmap to deploy and utilize an enhanced suite of merchandise planning and marketing systems. These systems will enhance our ability to compete in today’s retail environment and we will continue our aggressive rollout schedule for the next 12 to 18 months.

-David Jaffe, CEO of Ascena Retail Group Inc.

(Source: Flickr)

In only the 3 day period between May 13-16, ASNA’s stock increased by over 25%.  On May 15, the stock was trading 19.64% and 20.98% above its 50-day and 200-day moving averages, respectively. These results can be seen on the graph below.

(Source: Yahoo Finance)

Such a steep surge may be  a result of the following:

  • Strong Relative Strength Index (RSI) of 72.54- 81.54
  • Strengthened executive team to implement new strategies – clarify the added value to the team?
  • Charity Work, which benefits brand’s image and increasing customer loyalty

ASNA was so successful over the time period due to a combination of factors. Within the predicted time period, ASNA’s Relative Strength Index (RSI) increased from 71.28 to 81.51 on May 16. This strong value indicates positivity towards the future of the company. Additionally, over Q2, Ascena made changes to its executive team and leadership structure in order to promote growth. These executives implemented new merchandising capabilities that are beneficial to the company such as markdown and size pack optimization. Finally, on May 10, Lane Bryant and Catherines, 2 of Ascena’s brands, announced a successful round of fundraising for the Nationwide Children’s Hospital which is good for the brand’s public image and increases brand loyalty.

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Winning Stock Forecast: VAALCO Energy, Inc. (NYSE: EGY) Returns up to 42.73% in 3 days

[Image Source: CERTENT]

VAALCO Energy, Inc., an independent energy company, acquires, explores for, develops, and produces crude oil and natural gas. The company holds Etame production sharing contract related to the Etame Marin block located offshore the Republic of Gabon in West Africa. It also owns interests in an undeveloped block offshore Equatorial Guinea, West Africa. VAALCO Energy, Inc. was founded in 1984 and is headquartered in Houston, Texas.

Over the 3 days after I Know First issued a bullish short term forecast for EGY on May 4, 2018, VAALCO Energy’s stock price jumped from $1.09 to $1.2 per share, outperforming the market by about 9%. What happened that drove the growth? The reason lies in the company’s outstanding growth results for Q1 2018 released with the following highlights:

  • Total oil sales for Q1 of 2018, $27.6 million.
  • Income from continuing operations of $8.7 million ($0.15 per diluted share) for Q1 of 2018, 146% higher, compared with $4.4 million ($0.07 per diluted share) in Q1 of 2017.
  • Average price for crude oil in Q1 of 2018, $68.69 per barrel, an increase of 32% from $51.99 per barrel in Q1 of 2017.
  • Adjusted EBITDAX totaled $14.5 million in Q1 of 2018 compared with $10.4 million in the same period of 2017.

Total oil sales for Q1 of 2018 were $27.6 million, compared to $17.2 million in Q4 of 2017.  During Q1 of 2018, VAALCO sold approximately 393,000 net barrels of oil at an average price of $68.69 per barrel, compared to 280,000 net barrels at an average price of $59.89 per barrel in Q4 of 2017.

During Q1 of 2018, VAALCO reduced its debt by $2.1 million. On March 31, 2018, debt, net of deferred financing costs, totaled $7.0 million, of which $5.8 million is expected to be repaid during 2018 and was classified as current, reflecting the repayment terms of the loan agreement with the IFC.

[Image Source: Yahoo Finance]

From the above data one can see that VAALCO Energy, Inc. increased its share value by about 9% with the announcement of their successful Q1 revenues of 2018.

With good agreement with the I Know first bullish 3-day forecast that was published on May 4th, 2018, EGY stock grew after the financial operations resulted for Q1 of 2018 were published on May 7, 2018. The forecast illustrated a signal of 36.93 and a predictability of 0.1. In accordance with the forecast, EGY’s stock returned 42.73% over this period, highlighting the accuracy of the prediction produced by the I Know First algorithm.

Current I Know First subscribers received this bullish EGY forecast on May 4, 2018

To subscribe today click here.

How to read the I Know First Forecast

Disclaimer

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.

Winning Stock Forecast: Frontier Communications Corp (NASDAQ: FTR) Pushed Its Stock To A New Height With 39.14% In 3 Days

Winning Stock Forecast

“In the first quarter we achieved growth in consumer revenue, reflecting the early results of the substantial initiatives we have underway across the company” – Dan McCarthy, President and CEO

[Image Source: By Frontier Communications [Public domain], via Wikimedia Commons]

Over the one year period from May 2nd to May 5th, 2018 FTR stock price experienced steep price rise of more than 39%. Taking into account the overall FTR stock performance indicators for the last quarter, it is reasonable to suggest that this is the consequence of the company’s results achieved in 1Q 2018. Based on the press release on May 1, 2018 the following highlights are important to analyse:

  • Total revenue of $2.20 billion
  • Achieved sequential growth in consumer revenue
  • Broadband trends improved sequentially
  • The first quarter of positive CTF FiOS® broadband net additions since acquisition
  • Net income of $20 million
  • Adjusted EBITDA of $908 million

The above highlights could not pass unseen by the market and investors observed FTR stock growth of 39.14% during the above-mentioned period. The below chart illustrates this:

[Source: Google Finance]

At the same time the analyst community mostly took hold position on FTR stock over the last 4 months, with slightly increasing number of analysts who took under-perform positions:

[Source: Yahoo Finance]

On May 2, 2018, I Know First issued a bullish 3 days forecast for Frontier Communications Corp (NASDAQ: FTR). The forecast illustrated a signal of 4.91 and a predictability of 0.16. In accordance with the forecast, FTR stock returned 39.14% over this period, highlighting the accuracy of the prediction produced by the I Know First algorithm.

Current I Know First subscribers received this bullish FTR forecast on May 2, 2018.

To subscribe today click here.

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How to interpret this diagram

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Frontier Communications Corporation

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Winning Stock Forecast: DMC (NASDAQ: BOOM) Is Booming With 25.92% In 3 Days

Winning Stock Forecast

“North America’s unconventional onshore oil and gas industry remains very active, and a growing number of operators and service companies are turning to these systems to enhance well-completion efficiencies, improve reliability and drive down operating costs.” – Kevin Longe, president and CEO

Over the 3 days period starting from April 26, 2018, DMC’s stock price experienced steep price rise of more than 25%. Taking into account the overall BOOM stock performance of +200% over the trailing year , it is reasonable to suggest that this is the result of the company’s sustainable growth presented in the 1Q 2017 Financial Results released on April 26, 2018. The report contains the following highlights:

First quarter sales of $67.3 million increased 24% sequentially and 73% from Q1 2017
DynaEnergetics and NobelClad report sequential sales increases of 32% and 5%, respectively
Consolidated gross margin improves to 34% from 33% in Q4 2017 and 27% in Q1 2017
Net income of $3.9 million, or $0.26 per diluted share, includes $3.1 million in accrued anti-dumping penalties
First quarter adjusted operating income* was $8.6 million; adjusted net income* was

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Quick Win by the Algorithm: Geron Corporation (NASDAQ: GERN) Treats Investors With Stock Up 24.71% In 3 Days

Quick Algorithm

“With the preliminary data from IMerge presented at ASH, we now have clinical data in three blood cancers, ET, MF and MDS, where imetelstat exhibits potential disease modifying activity by inhibiting the progenitor cells of the malignant clones that drive the underlying diseases”

– said John A. Scarlett, M.D., Geron’s President and Chief Executive Officer.

(Image Source: www.troutaccess.com)

Geron Corporation (NASDAQ: GERN) operates as a biopharmaceutical company. The company supports the clinical stage development of imetelstat, a telomerase inhibitor for the treatment of hematologic myeloid malignancies. It has collaboration and license agreement with Janssen Biotech, Inc. to develop and commercialize imetelstat worldwide for indications in oncology, including hematologic myeloid malignancies and other human therapeutic uses. The company was founded in 1990 and is based in Menlo Park, California.

Over the 3 days after I Know First issued its forecast on March 16, 2018, Geron Corporation’s stock price jumped from $3.48 to $4.26 per share, outperforming the market by more than 25%. So what is the driver behind that growth  and what happened during 2017 financial year? The reason lies in the company’s results for 2017 released with the following highlights:

  • Net loss of $27.9 million, or $0.18 per share, compared to $29.5 million, or $0.19 per share, for 2016
  • Total operating expenses for 2017 were $30.3 million compared to $36.8 million for 2016
  • Research and development expenses for 2017 were $11.0 million compared to $18.0 million for 2016

From the above figures one can see that despite that the company decreased investment into R&D activity and by some 39% comparing to 2016, the total operating costs of the company for 2017 financial year also decreased by some 18%. This performance in 2017 was accompanied by 5.5% contraction of the net loss figure comparing to 2016. This shows that the company may have managed to optimize its spending and invest the available funds without affecting the overall costs composition and production efficiency, and hence should bring more value to the investors.

[Image Source: Yahoo Finance]

Finally, the latest Yahoo Finance data supports the neutral-to-positive outlook and shows that 1 out of 3 analysts took the buy position and the remaining 2 took hold position with regards to Geron Corporation’s stock.

[Source: Google Finance]

On March 16, 2018, I Know First issued a bullish 3 day forecast for Geron Corporation (NASDAQ: GERN). The forecast illustrated a signal of 62.79 and a predictability of 0.11. In accordance with the forecast, GERN’s stock returned 24.71% over this period, highlighting the accuracy of the prediction produced by the I Know First algorithm.

Current I Know First subscribers received this bullish GERN forecast on March 16, 2018.

To subscribe today click here.

Small Cap Stocks To Buy

How to read the I Know First Forecast

Disclaimer

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.