TipRanks is a comprehensive research tool for investment traders that enables you to make more informed, data-driven decisions. The tool is easy to use and works by summarising news, stock market research ratings and analysts’ forecasts into actionable insights.
TipRanks was formed in 2011 and is an independent provider that uses a proprietary algorithm to generate insights. Its tools are provided to our clients for free.
What TipRanks tools are available on our platforms?
Analysts’ consensus ratings
These ratings provide an aggregated view of expectations and consensus on a particular stock from a wide range of global analyst opinions. They’re then condensed into a single indicator, which can help you make investment decisions based on expert analysis.
Analyst rating definitions:
Strong buy means analysts expect the stock to far exceed the average return on the stock market.
Moderate buy means the stock is expected to outperform the overall market.
Hold means analysts recommend to neither buy nor sell the stock. A ’hold’ rating is usually given due to strong volatility in the stock market, the performance of other stocks in the same sector or uncertainty about the stock.
Moderate sell means the expectation is for the stock to perform slightly lower than the overall stock market.
Strong sell means analysts expect the stock to perform lower than the overall stock market.
How are analysts’ ratings measured by TipRanks?
The success rate for analysts and average return per stock are calculated by measuring all buy and sell ratings on that stock. When an analyst changes their ratings from buy to sell, for example, the tool assumes that they’ve closed their existing positions on it. This means that the stock no longer impacts their rating nor does it factor into their average return-per-stock numbers.
The tool’s default setting measures each analyst’s ‘buy’ rating on a stock over one year – unless they downgrade it to a ‘hold’ within those 12 months. If this happens, the hold rating is only used to ‘close’ the buy rating before the one-year mark. Any potential profit isn’t measured after a hold rating is made.
When an analyst issues a sell rating on a stock, any open ‘buy’ positions are essentially closed and a short position is opened. The same is true on the inverse – if an analyst upgrades a ‘sell’ rating to a ‘buy’, their short position on the stock will be closed and a long one will be opened.
How is the ‘analyst consensus’ rating calculated?
The ‘analyst consensus’ is calculated with a three-point system that incorporates the analyst ratings made over the last three months, where:
- Buy = 1
- Hold = 3
- Sell = 5
The score of every rating made in the last three months is calculated to provide one of five consensuses:
- Strong buy: less than or equal to 1.5
- Moderate buy: more than 1.5, but less than or equal to 2.5
- Hold: more than 2.5, but less than or equal to 3.5
- Moderate sell: more than 3.5, but less than or equal to 4.5
- Strong sell: more than 4.5
A stock can have a ‘strong buy’ or ‘strong sell’ consensus only if it received three or more ratings in the last three months. If it has only one or two ratings over three months and is a ‘strong buy’ or ‘strong sell’, it’ll be normalised to moderate buy or moderate sell, respectively.
Smart score
‘Smart score’ is a stock rating system that combines eight unique data sets to generate a score from one (highest) to ten (lowest).
- Stocks with a score of 8–10 are considered ‘outperform’
- Stocks with a score of 4–7 are considered ‘neutral’
- Stocks with a score of 1–3 are considered ‘underperform’
The score is data-driven and doesn’t involve any human intervention. Six of the eight market factors are incorporated into the 'smart score’ calculation and are unique to TipRanks – only the technical and fundamental factors aren’t.
The contributing market influences are:
- Wall Street analyst ratings: a consensus rating from the analyst’s scores that TipRanks has access to. Top analyst ratings are from those who fall in the 20th to 30th percentile of all analysts, outperforming the remaining 70% to 80%. To view them, you can filter the analyst consensus and price target on a stock to ’best performing analyst’
- Corporate insider transactions: corporate insiders are the company executives, board members, or 10% shareholders of publicly traded companies. When corporate insiders for US organisations buy or sell their own company shares, they’re required to submit each transaction to the Securities and Exchange Commission (SEC) within two working days
- Financial blogger opinions: a consensus rating from a wide range of credible and well-respected financial bloggers. This can be a useful analysis point as bloggers evaluate companies differently, simply because they’re independent and therefore more flexible with their research methods
- Individual investor sentiment: a summary of investor buy and sell activity from all the exchanges and brokers TipRanks works with to show whether more traders are buying or selling a stock
- Hedge fund manager activity: hedge fund pages are updated on a quarterly basis as 13(f) forms are submitted to the SEC (for US hedge funds). Because hedge funds are required to make their investment activity public, TipRanks can use this data to provide an aggregate view of all the available information
- News sentiment: TipRanks’ proprietary natural language processing (NLP) algorithm automatically sifts through thousands of news websites and pages to find, analyse and link relevant news stories. Algorithms detect words that relate to the stock then grade the sentiment of these words to calculate their relevance and importance, resulting in a ’bullish’, ’bearish’ or ’no sentiment’ categorisation
- Technical factors: a summary of key technical trends – including momentum shifts and moving averages – that provide quantitative backing to the tool’s recommendations
- Fundamental factors: a summary of key fundamental data to ground recommendations in company performance
What are ‘top smart score stocks’ at TipRanks?
The ‘top smart score stocks’ displays the best stocks in a single watchlist to help you quickly identify trading opportunities. The rankings are based on TipRanks’ smart score feature.
This unique rating measures stocks on their potential to outperform the market based on eight key factors. These include how the best performing analysts are rating stocks, whether hedge funds are buying or selling them, as well as their fundamental and technical factors.
Which stock markets are covered by the tool?
- Australia
- United Kingdom
- United States
- Canada
- Germany
- Spain
- Singapore
Where can I find the tool?
You can access TipRanks from our trading platform.
