Intellectual Capital analysis of leading stocks in India
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Intellectual Capital analysis of leading stocks in United States
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Although the relevance of Intellectual Capital as
a driver of growth in the knowledge economy has been established beyond doubt, its measurement and reporting remains
a distant dream. icTracker is a groundbreaking Intellectual Capital tracking tool that has been conceptualised by
Attainix Consulting to address this shortcoming.
icTracker calculates the Intellectual Capital of some of
the leading businesses worldwide, from their publicly reported financials, every quarter. Along the way, icTracker also
calculates the EVA® and
Knowledge Basis of the stock. These three parameters lead
to a simple three-step stock picking process, that can be used effectively by any investor
to quickly make good long term picks for his/her portfolio.
Here are the three steps in order:
STEP 1. INCOME Measure - Is the business generating enough income to cover its cost of capital?
Accounting profits reported by the business every quarter do not correctly indicate whether the business is making money.
Therefore to answer this question, we look at the EVA®
for the quarter, which represents the excess money made by the business AFTER covering its cost of capital.
STEP 2. ASSET QUALITY Measure - Does the business have significant Knowledge assets?
In this step, we look at whether the business is making money primarily from its Knowledge Assets, since such assets
are a source of long term competetive advantage for the business. Knowledge
Basis - a ratio of the Intellectual Capital of the Business to its Intrinsic Worth - is considered for this purpose.
This ratio should ideally be more than 50% on a sustained basis.
STEP 3. MARKET Measure - Is the stock undervalued?
Finally, if the stock passes both the
Income and Asset Quality tests, we look at whether it is undervalued by the market at present. If so, this presents
investors with a buying opportunity of an excellent business.
That's how simple it is to select quality stocks, using the power of Intellectual Capital analysis.