Investment opportunities evaluation: A comparative analysis and the multi-criteria ranking of top-listed companies

Tadija Đukić¹, Bojana Novićević Čečević¹ and Adrijana Jevtić Tomić²

¹University of Niš, Faculty of Economics, The Republic of Serbia
²University of Belgrade, Technical faculty in Bor, The Republic of Serbia

Investors are faced with the challenge of identifying the most promising companies for their potential investment in the stock market. This research study aims to propose a systematic approach to the selection of top-listed companies for investment, focusing on the two levels of analysis - the ratio analysis based on liquidity and profitability, and the multi-criteria ranking using the PROMETHEE method. The observed companies are divided into two groups: group A, which includes companies with a PE ratio above 50, and group B, which includes companies with a PE ratio below 5. The findings of the study highlight the fact that companies with higher PE ratios tend to exhibit better overall business performance as observed on an individual basis and based on the ratio analysis. Although there are noticeable differences in the ratio indicators between the companies, these differences are not significant when the overall review is considered. The combination of ratio analysis and the PROMETHEE method provides an effective method for evaluating their business performance, giving guidance to investors and decision-makers in selecting the most promising investment opportunities. The results of the multi-criteria ranking show that the companies that belong to group B have a better rank than the others, and that investors should invest in the companies Vale S.A. and Tesla, Inc. as well.

Keywords: ratio analysis, PROMETHEE method, stock market, investment, comparative analysis

JEL Classification: G11, M49