Envela (Envela) Predictability Rank

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What is Envela Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Envela Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Envela Predictability Rank Related Terms

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Envela (Envela) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Envela Corp (AMEX:ELA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1901 Gateway Drive, Suite 100, Irving, TX, USA, 75038

Website

https://www.envela.com

Envela Corp and its subsidiaries engage in diverse business activities within the recommerce sector. These include recommercializing luxury hard assets, consumer electronics and IT equipment; and end-of-life recycling solutions. It operates through two re-commerce business segments represented by its two direct subsidiaries. DGSE, LLC primarily buys to resell or recycle luxury hard assets like jewelry, diamonds, gemstones, fine watches, rare coins and related collectibles, precious-metal bullion products, gold, silver and other precious metals, and ECHG, LLC focuses on the recommercialization of business IT equipment and consumer electronic devices.

Executives

Allison M Destefano	director	5353 KELLER SPRINGS, #2221, DALLAS TX 75248
Bret Allen Pedersen	officer: CHIEF FINANCIAL OFFICER	13022 PRESTON RD, DALLAS TX 75240
Richard D Schepp	director	C/O KOHLS LEGAL, N56 W170000 RIDGEWOOD DR, MENOMONEE FALLS WI 53051
James R Ruth	director	1337 EAGLE BEND DRIVE, SOUTHLAKE TX 76092
Alexandra C Griffin	director	2500 MCKINNEY AVE., #839, DALLAS TX 75201
Joel S Friedman	director	11527 ASHLEY LANE, FRISCO TX 75035
Eduro Holdings, Llc	10 percent owner	38660 SUSSEX HWY., BLDG 10, #102, DELMAR DE 19940-3529
John Richardson Loftus	director, 10 percent owner, officer: Chairman, President & CEO	13022 PRESTON RD, DALLAS TX 75240
Truscott Capital, Llc	10 percent owner	40 E. MAIN STREET, SUITE 626, NEWARK DE 19711
Ntr Metals, Llc	10 percent owner	10720 COMPOSITE DRIVE, DALLAS TX 75220
Elemetal, Llc	10 percent owner	15850 DALLAS PARKWAY, DALLAS TX 75248
Stephen Raymond Patterson	officer: Acting Chief Financial Officer	15850 DALLAS PARKWAY, SUITE 140, DALLAS TX 75248
William E Leroy	director	15850 DALLAS PARKWAY, SUITE 140, DALLAS TX 75248
Michael J. Noel	director	724 LEXINGTON AVE, COPPELL TX 75019
Nabil J. Lopez	director, officer: Chief Financial Officer	15850 DALLAS PARKWAY, SUITE 140, DALLAS TX 75248