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Beating the Odds - Investigating the Predictors of Stock Price Superiority in Swedish High-Quality Companies

Windahl, Emil LU and Fries, Adrian LU (2024) NEKH02 20241
Department of Economics
Abstract
The fundament of the efficient market hypothesis is that no historical information can be used to predict stock returns. Despite this, so-called quality investing is a popular practice and a strategy that has generated above-average market returns. By analysing Swedish high- and low- quality companies, this study aims to answer the relationship between certain financial metrics and stock returns. Further on, this study defines high-quality companies that, on average, generate results greater than low-quality companies. High-quality companies are shown to have a strong positive correlation to the growth rate in the EV/EBIT multiple and a weak but positive relationship to ROA. Low-quality companies have a weak positive relationship to the... (More)
The fundament of the efficient market hypothesis is that no historical information can be used to predict stock returns. Despite this, so-called quality investing is a popular practice and a strategy that has generated above-average market returns. By analysing Swedish high- and low- quality companies, this study aims to answer the relationship between certain financial metrics and stock returns. Further on, this study defines high-quality companies that, on average, generate results greater than low-quality companies. High-quality companies are shown to have a strong positive correlation to the growth rate in the EV/EBIT multiple and a weak but positive relationship to ROA. Low-quality companies have a weak positive relationship to the growth rate in EV/EBIT. (Less)
Please use this url to cite or link to this publication:
author
Windahl, Emil LU and Fries, Adrian LU
supervisor
organization
course
NEKH02 20241
year
type
M2 - Bachelor Degree
subject
keywords
High-quality, stock price, quality investing, predictability of stock price, EMH
language
English
id
9155370
date added to LUP
2024-09-24 09:00:34
date last changed
2024-09-24 09:00:34
@misc{9155370,
  abstract     = {{The fundament of the efficient market hypothesis is that no historical information can be used to predict stock returns. Despite this, so-called quality investing is a popular practice and a strategy that has generated above-average market returns. By analysing Swedish high- and low- quality companies, this study aims to answer the relationship between certain financial metrics and stock returns. Further on, this study defines high-quality companies that, on average, generate results greater than low-quality companies. High-quality companies are shown to have a strong positive correlation to the growth rate in the EV/EBIT multiple and a weak but positive relationship to ROA. Low-quality companies have a weak positive relationship to the growth rate in EV/EBIT.}},
  author       = {{Windahl, Emil and Fries, Adrian}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Beating the Odds - Investigating the Predictors of Stock Price Superiority in Swedish High-Quality Companies}},
  year         = {{2024}},
}