Abstract
We investigate whether a stock selection strategy based on multiples’ accuracy can provide sustainable returns. More specifically, the aim of this part is twofold. On the one hand, we try to test whether a link exists between large valuation errors and future price performance; and on the other, to understand if the multiples previously introduced can be utilized as investment criteria to build profitable investment strategies.
As a result, the idea underlying the chapter is to test whether listed stocks with large errors derived from multiples’ metrics present systematically price movements in the following 12 months. Is it possible to create profitable investment strategies based on these errors?
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Rossi, E., Forte, G. (2016). A Portfolio Approach: Multiples’ Accuracy and Stock Selection. In: Assessing Relative Valuation in Equity Markets. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-56335-4_5
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DOI: https://doi.org/10.1057/978-1-137-56335-4_5
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