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how to identify quality stocks
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July 2024 · 5 min read

Quality Stocks


Quality is another one of the most common equity factors in existence and perfectly reflects its name. The goal is to search for companies that are of the highest quality to investors. Usually this is represented as stocks that have

  • stable cashflows and balance sheet
  • earnings and sales growth
  • strong governance and safe companies

Even though it is popular as an overall concept and factor, the definition of what exactly constitutes a quality company is not easily agreed upon. We have also touched on this idea of the quality factor in a previous topic, that was focused more on factor performance. This post is more about the metrics themselves that our users can investigate to find their own quality companies. Some investors may wish to focus on one facet of quality in particular (for example earnings growth) whereas others may want to focus more on the governance and safety aspect.

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