Stock selection based on multi-criteria decision making techniques: An application using PROMETHEE sequencing method

It is a reality that individuals have been more sensitive about earning money and evaluating their savings in recent years. The developing technology and high standards of living have been essentially giving rise to the individual's need of money. The individuals have started seeking for alternative ways of gaining money more easily instead of keeping up with these developments and earning money by working harder for more cosy and luxurious living standards. The alternative ways for gaining money have made progress by the means of internet. Internet driven extra jobs in addition to the core bussiness of individuals have made easier to get extra profit. Nevertheless it is not possible to say that all these methods are legal or reliable. The most useful alternative to earn money is the stock market where people can earn money in a legal and reliable way. Stockjobbing takes place on the top of the reliable and profitable ways of earning money in the stock market. The most convenient stock should be chosen among the alternatives which have been determined by the decisionmaker for the true stock preferences. The selection of the stocks is a very problematic process which requires the assessment of more than one option. In this study, the process of the selection of stocks has been analyzed and an alternative selection method has been developed by means of Promethee sequencing method. In this study, the stocks of companies which are involved in energy sector have been examined and which assessment factor is more convenient for each stock has been determined. Furthermore, after the assessment factors which are obtained from financial statements and real market have been determined, two different practices have been implemented by Promethee sequencing method and the results have been compared. In the consequence of practices/studies, considering financial statements and the real market, eleven evaluation criteria which affects the selection of stocks has been established. These are price to earning ratio, market to book value ratio, market value to net sales ratio, dividend yield, beta coefficient, real operating profit margin, net profit margin, stockholder's equity profit, current rate, liquid ratio and debt ratio. These criterias are weighted by AHP method and for both situations alternatives have been prioritized by the practises of partial ordering by Promethee I and total ordering by Promethee II. GAIA analysis has been implemented. Therefore, it is provided that the decisionmaker could choose the most convenient stock which provides the necessary criteria among the others. Keywords: Promethee, Stock Selection, Multi-Criteria Decision Making, Energy.