Stockopedia’s ‘High Flyers’ are the stock market superstars. These companies tend to be the ones that fund managers jostle and barter over. They are high quality, growing stocks with a history of beating estimates - and Mortgage Advice Bureau (LON:MAB1) is one of them.
Mortgage Advice Bureau is a small cap stock in the Investment Management & Fund Operators industry. When we analyse Mortgage Advice Bureau from a factor perspective, we find that it has a Quality Rank of 86, a Momentum Rank of 67, but a Value Rank of only 33. This is the classic factor profile of a High Flyer.
A combination of high quality, high momentum and low value is great when earnings go up but a bad place to be when things go wrong. The higher they rise the harder they fall, after all - and few stocks stay High Flyers for long. Mean reversion is a very real thing and it works like gravity on growth.
What kind of High Flying stock is Mortgage Advice Bureau?
So, High Flyers tend to be riskier and more volatile than the market average. But is this true of Mortgage Advice Bureau?
We can find out quickly by applying Stockopedia’s RiskRatings system, which splits the stock market into five buckets according to stock price volatility. The five classifications (from least to most volatile) are:
- Conservative (10% of the market)
- Balanced (15% of the market)
- Adventurous (20% of the market)
- Speculative (25% of the market)
- Highly Speculative (30% of the market)
Mortgage Advice Bureau is a speculative stock. This means that the group is in the more volatile half of the market in terms of stock price volatility, as might be expected of a High Flyer. Those looking to invest here should prepare themselves for a potentially bumpy ride.
That said, we can see from Mortgage Advice Bureau’s above average five-year return on capital employed figure of 77.9% that the group has been highly profitable over multiple years. This suggests that Mortgage Advice Bureau can back up its favourable factor exposures and volatility characteristics with some kind of economic moat.
Disclaimer: These articles are provided for information purposes only. The content is not intended to be a personal recommendation. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. The author has no position in the stocks mentioned, unless otherwise stated.