My bullish case for Himax Technologies(NASDAQ:HIMX) is backed by great confidence and data. There a numerous reasons that add to my great confidence such as HIMX having a perfect Piotroski F-Score of 9, or because HIMX recently made a production deal with Google. First I will discuss the basics and historical performance involved with F-Scores then I will present why I think you should add HIMX to your portfolio at your earliest convenience.
The Piotroski F-Score is a score given to each security based on its financial health. The score is between 0 and 9; 9 indicating the company is very financially healthy and 0 indicating the company is in financial distress and the possibility of default could be right around the corner. This score is widely used across the financial industry to find good investments to buy or short. The securities are awarded one point per condition below:
- Most recent Yearly Net Income > 0
- Yearly Cash Flow from Operations > 0
- ROA has increased
- Cash Flow from Operations > Net Income
- Long-term Debt to assets is decreasing
- Current Ratio is increasing
- No new shares were issued
- Gross Margin is increasing
- Asset turnover is increasing
Let's first explore how a stock's Piotroski Score is related to performance. We will be doing this by collecting data from a back test. The back test buys and sells the stocks that pass a desired stock screener since 2003 and rebalances weekly. So each week when it rebalances it buys all new stocks that pass the stock screener and sells all new stocks that no longer pass the stock screener. The result is the annualized and total portfolio return if you would have done so since 2008. The screen shot below shows our back test graph; the green line is the portfolio return while the blue line is
