The ultimate investment strategy ideas for 2023 centered around the best value to book ratios and Piotroski-F-Score await you in this article.

Unlock insights on enhancing this strategy and gaining a comprehensive understanding of incorporating the value to book ratios and Piotroski-F-Score into your investment portfolio.

The premier value to book ratio Piotroski-F-Score investment stocks for 2023 will be categorized into:

• Global
• North American
• European
• Asian

First, let's delve into some background information.

The value to book ratio (Current share price / Book value per share) serves as a potent valuation metric for identifying undervalued investment prospects. Backed by extensive research over significant periods, this strategy outperforms market performance.

Enhancing the Value to Book Ratio

 However, like any single ratio investment strategy, considerable enhancements can be made.

Prior to that, here are the back tested returns that could have been harvested leveraging a low Value to Book (VB) investment approach in Europe over the 12-year period from June 13, 1999 to June 13, 2011.

Source: Quantitative Value Investing in Europe: What works for achieving alpha

Q1 (Quintile 1) represents the cheapest 20% of companies in terms of PB, while Q5 (quintile 5) represents the most expensive.

The lowest VB companies (Q1) significantly outperformed the market, which yielded a 30.54% return over that 12-year period.

To implement your personal Value to Book Piotroski-F-Score investment strategy – Click here

Optimizing the Value to Book Strategy Returns

An avenue to amplify your returns through a low Value to Book strategy is to fuse it with the Piotroski-F-Score.

Unraveling the Piotroski-F-Score

The Piotroski-F-Score was crafted by an enigmatic accounting professor, Joseph D. Piotroski, who shuns the limelight and is rarely interviewed.

In 2000, his research paper titled “Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers” aimed to engineer a system (using a straightforward nine-point scoring model) to boost returns through investing in low value to book (referred to as high book to market) value companies.

His findings surpassed even his wildest expectations.

The strategy of purchasing only companies scoring highest (8 or 9) on his nine-point scale, or F-Score as he termed it, during the 20-year period from 1976 to 1996 resulted in an average market out-performance of 13.4%.

Even more impressive were the outcomes of a strategy involving investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Outperforming the Index by 7%

During the same 20-year period from 1976 to 1996, this tactic led to an average annual return of 23%, significantly trumping the average S&P 500 index return of 15.83% during the corresponding period.

The average out-performance of the index of just over 7% may seem inconspicuous, yet over the two-decade period, an investment of 100 in this long short investment strategy would have burgeoned to 6,282 compared to a mere 1,860 if you had invested in the S&P 500 index.

The gap between these two rates of return over the 20-year period amounts to over 44 times your initial investment!

Piotroski-F-Score Exclusive Strategy

This is what ensued when the Piotroski-F-Score was evaluated in Europe across the 12-year period from June 13, 1999 to June 13, 2011.

Source: Quantitative Value Investing in Europe: What works for achieving alpha

Q1 (Quintile 1) represents companies with the highest (best) Piotroski-F-Score, while Q5 (quintile 5) features companies with the lowest Piotroski-F-Score (worst).

The highest F-Score companies (Q1) substantially outperformed the market, which returned 30.54% over the same 12-year period.

As is evident, the strategy yielded the best results for medium-sized enterprises.

To implement your personal VB Piotroski-F-Score investment strategy – Click here

Scrutinizing the Piotroski-F-Score

 We also examined the Value to Book ratio alongside numerous other ratios (including the Piotroski-F-Score), and the table below illustrates how deploying solely a low Value to Book ratio strategy can yield substantial improvements.

Source: Quantitative Value Investing in Europe: What works for achieving alpha

Prime Combination – Momentum
Notably, the optimal approach to heighten returns was to pair VB with Price Index 6 months (6 months momentum) or Price Index 12 months (12 months momentum).

Value to book and Piotroski-F-Score – A 317% Enhancement
Conjoining low Value to Book companies with those exhibiting the highest (best) Piotroski-F-Score would have realized the fourth highest return over the 12-year period, amounting to +685.2%, yet still a highly commendable yield. This equates to an impressive 317% improvement over a value to book only strategy.

Now, let's explore the investment concepts.

Top 2023 Global Price to Book Piotroski-F-Score Investment Concepts

Exclusive Value to Book Piotroski-F-Score Investment Concepts

Here's what the screening process encapsulated:

• Incorporating all countries globally
• Top 20% of Value to Book companies
• Minimum daily trading volume of $100,000
• Minimum company market value of $100 million
• Financial statements updated within the last 6 months
• Piotroski-F-Score > 6
• Outcomes sorted based on Value to Book from undervalued to overvalued

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