Artificial intelligence isn’t new to the world of stock picking, but it hasn’t really been an option for retail investors. That is, until now.
Traditionally, powerful artificial intelligence systems – and the high-octane brainpower needed to develop and run them – that target stocks to watch have been available only to hedge funds, quant funds and a select group of asset management firms.
Danel Capital, a financial advice company, aims to change all that with a new analytics platform that harnesses the power of big data technology and machine learning. The idea is to help regular investors make smarter decisions with their tactical stock picks.
Here’s how it works:
The company’s AI algorithms analyze more than 900 fundamental, technical and sentiment data points per day for 1,000 U.S.-listed shares and 600 stocks listed in Europe. Danel says that in total, its AI predictive scoring capability churns through 10,000 daily indicators. The platform then analyzes that huge amount of data to predict the future performance of each stock, calculating the probability of beating the market over the next four months.
Once the algo determines which stocks to watch, it spits out a rating known as a Smart Score, which ranges from 1 to 10. Danel says that, on average, stocks with the highest Smart Scores of nine or 10 almost doubled the S&P 500’s annualized returns from January 2017 to July 2020.
And, indeed, the top 5 rankings Danel Capital firm released in January and February beat the S&P 500 by considerable margins. The firm has since switched to issuing top 10 rankings.
Note well that we’re talking about the probability of beating the market over the next few months or so, not days. That makes the platform useful for tactical investors, not day traders.
It’s an interesting system that makes some pretty counterintuitive stock picks. Whether it proves to be a useful tool for retail investors remains to be seen, but it’s worth keeping an eye on.
Here are 10 stocks to watch over the next few months, as Danel Capital’s AI platform gives them the highest probability of beating the market in that time. All have perfect Smart Scores of 10, but for good measure, we also took a look at some fundamentals, technicals and analyst research on these names.