A rating is only useful if you know how it was made. At Leago Rifumo Capital every company goes through the same five steps, and the rating at the end follows written rules — not a feeling.
The five steps
- Understand the business — what it sells, who pays, why customers stay and what could break it.
- Check the numbers — four years of growth, margins, cash flow, debt and returns.
- Value it three ways — forward P/E, a five-year discounted cash flow and EV/EBITDA against listed peers, blended 50 / 20 / 30.
- Score it — a 50-point quality checklist, averaged to a score out of 5.
- Time it and manage the risk — technical review, review levels and position sizing.
The rating rules (six-month horizon)
| Rating | Rule |
|---|---|
| BUY | Upside of 7.5% or more and a score of at least 3.5 and no critical item scored 2 or lower |
| SELL | Downside of 5% or more or a score below 2.5 |
| HOLD | Everything in between |
The critical items are the ones that can sink a company on their own: disruption, debt, leadership and accounting.
Why a great company can be a SELL
Price matters. A business can be excellent and still be priced for more than it can deliver over the next six months. That is why our October screen found that the strongest-trending US shares were often the most expensive — and why a great chart is not a BUY.
Try it yourself
Use the rating checker to test the rules with your own numbers, and see the watchlist for how ratings turn into trade setups.
Educational only — not financial advice.