Why do stocks with Timeliness ranks of 1 or 2 sometimes have below-average, long-term appreciation potential, and vice versa?
Probably the most important thing for all readers to know is that the time horizons for Timeliness ranks and for 3- to 5-year Projections are very different. Our Timeliness ranks are for the relative performance of stocks over the coming six to 12 months. Our forecast for long-term price potential is for 3 to 5 years. Because of the very different time periods, our forecasts for the two periods can be very different. But to provide a more specific answer, stocks ranked 1 or 2 for Timeliness often have been moving higher, and while we think these stocks will continue to outperform other stocks in the Value Line universe, it is unrealistic to think a stock’s price will keep moving up forever. At some point, earnings growth is likely to slow, at least somewhat, and our analysts try to be as realistic as possible in calculating the 3- to 5-year projections. If earnings growth slows in the future, the stock price and the price/earnings ratio are likely to move down, and the analyst is proba
