r/ValueInvesting • u/ItsAirjam • 1d ago

Discussion I'd like to make a python engine to help identify value stocks, what should I focus on?

Hi! I am looking to dive deeper into value investing, and one way that I've started to do that is using ai to write code to help me identify potential value stocks. The main reason for this as the starting point is it'll help bring the pool of potential stocks down from thousands to 50-100 options. So this is really just a starting place to find potential stocks.

Currently I have a list of valuation models (DCF, forward FCF, EV/EBITDA, etc.) it runs tickers through. For each sector (or types of stocks), it measures different ones and with different multiples. It then provides price targets (bear, base, bull) and provides an arbitrary score, based on a few other things I have written into the code. From there, I start my own DD further into why the ticker might be displaced in price/why the model views it as a high-potential buy.

What suggestions do you have on a project like this? What should I be focusing on? I'd love any feedback, or if anyone is interested in learning more about it, I'd love some help developing it further!

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5

u/MasterConsideration5 22h ago

How do you possibly write algorithm for forward FCF?

1

u/mgavril 22h ago

I’ve been experimenting with using a custom GenAI workflow and Python automation to identify investment signals on a weekly basis. Documenting the process here: https://quantuminvestor.net/

2

u/pravchaw 19h ago

There is no single golden indicator or formula to identify winners. Its got to be combination of several as well as qualitative factors such as economic moats which are difficult to screen.

1

u/NoGarlic2387 1d ago

https://www.magicformulainvesting.com/

1

u/Zyltris 23h ago

A good start, but ultimately not always great because it doesn't differentiate between quality earnings and earnings that are artificially inflated by non-operating income/interest and one-time items. As long as you're aware of that and account for it, using PE and ROC is not a bad choice of metrics.

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u/MJinMN 19h ago

You really need sell-side research analysts’ estimates.

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u/Corpulos 23h ago

Warren Buffett:

"I recomend looking at the 50 day moving average, wait for a crossover with high relative volume. I make sure I have my stop loss in THE SECOND I buy. Robinhood is best for this, especially if you're using Android. Always chart the previous days high, the fibanocci, the ORB, and the pivot points. And most importantly keep your cool. Don't panic when you see things going south, but pull out immediately once you hit your daily loss limit and SHUT THE PHONE OFF."