Invitae (Invitae) Predictability Rank

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What is Invitae 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.

Invitae 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

Invitae Predictability Rank Related Terms

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Invitae (Invitae) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » Invitae Corp (OTCPK:NVTAQ) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

NVTA:Mexico IV8:Germany

Address

1400 16th Street, San Francisco, CA, USA, 94103

Website

https://www.invitae.com

Invitae Corp operates as a genetic information company in diagnostic and research industry. The company's tests include multiple genes associated with hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders, metabolic disorders and other hereditary conditions.

Executives

Ana J. Schrank	officer: Chief Financial Officer	1400 16TH STREET, SAN FRANCISCO CA 94103
Robert M. Guigley	officer: Chief Commercial Officer	1400 16TH STREET, SAN FRANCISCO CA 94103
Robert Iv Dickey	officer: See Remarks	320 WEST MERMAID LANE, PHILADELPHIA PA 19118
Jeff Parsons	officer: See remarks	2575 AUGUSTINE DRIVE, SANTA CLARA CA 95054
Robert L Nussbaum	officer: Chief Medical Officer	458 BRANNAN STREET, SAN FRANCISCO CA 94107
Thomas Brida	officer: General Counsel	458 BRANNAN STREET, SAN FRANCISCO CA 94107
Robert F. Werner	officer: Chief Accounting Officer	2500 FABER PLACE, PALO ALTO CA 94303
Yafei Wen	officer: Chief Financial Officer	1400 16TH STREET, SAN FRANCISCO CA 94103
Kenneth D. Knight	officer: Chief Operating Officer	1400 16TH STREET, SAN FRANCISCO CA 94103
William H Osborne	director	1415 WEST 22ND STREET, SUITE 1100, OAK BROOK IL 60523
Sean E George	director, officer: CEO	458 BRANNAN STREET, SAN FRANCISCO CA 94107
Shelly D Guyer	officer: Chief Financial Officer	1025 GREEN STREET, SAN FRANCISCO CA 94133
Katherine Stueland	officer: Chief Commercial Officer	458 BRANNAN STREET, SAN FRANCISCO CA 94107
Geoffrey Crouse	director	3130 GATEWAY DRIVE, P O BOX 5625, NORCROSS GA 30091-5625
Jason W. Myers	director, other: President, Oncology	C/O ARCHERDX, INC., 2477 55TH STREET, SUITE 202, BOULDER CO 80301