Below are the results of a value screen using multiple requirements. The criteria are listed below:
Forward P/E > 0
Price/Cash < 3
Price/Free Cash Flow < 15
Debt/Equity < .1
Price/Book < 1
Current Ratio > 3
I did not add a liquidity screen such as a minimum share price or volume requirement in order to allow for more flexibility in evaluating potential investments. The screen is intended as a starting point for further investigation but tends to generate a small list of value companies with balance sheet strength and in theory more limited downside.
However, many of the companies are trading below book value and at low cash and FCF multiples due to concerns over future earnings and cash flow. The positive forward P/E requirement is intended to eliminate companies which do not expect profits over the next year but will not eliminate companies with dwindling earnings growth. Thus, I have added a second list with the following, modest, criteria:
EPS annual estimated growth next 5 years > 10%
Below are the two lists.
Forward P/E > 0
Price/Cash < 3
Price/Free Cash Flow < 15
Debt/Equity < .1
Price/Book < 1
Current Ratio > 3
I did not add a liquidity screen such as a minimum share price or volume requirement in order to allow for more flexibility in evaluating potential investments. The screen is intended as a starting point for further investigation but tends to generate a small list of value companies with balance sheet strength and in theory more limited downside.
However, many of the companies are trading below book value and at low cash and FCF multiples due to concerns over future earnings and cash flow. The positive forward P/E requirement is intended to eliminate companies which do not expect profits over the next year but will not eliminate companies with dwindling earnings growth. Thus, I have added a second list with the following, modest, criteria:
EPS annual estimated growth next 5 years > 10%
Below are the two lists.
| Ticker | Company | Forward P/E | P/B | P / Cash | P/Free Cash Flow | Current Ratio |
| ACET | Aceto | 7.86 | 0.86 | 2.43 | 9.36 | 3.98 |
| CACH | Cache Inc. | 35.5 | 0.76 | 1.66 | 5.06 | 3.02 |
| DIVX | DivX, Inc. | 51.7 | 0.92 | 1.22 | 7.83 | 8.67 |
| DWSN | Dawson Geophysical Co. | 44.94 | 0.92 | 2.94 | 3.62 | 4.96 |
| HDNG | Hardinge Inc. | 247 | 0.38 | 2.24 | 2.09 | 3.45 |
| HOTT | Hot Topic Inc. | 15.28 | 0.99 | 2.89 | 9.74 | 3.24 |
| IGOI | iGo, Inc. | 18.83 | 0.92 | 1.09 | 6.27 | 4.83 |
| OPTV | OpenTV Corp. | 13.9 | 0.96 | 1.76 | 10.81 | 3.22 |
| PCTI | PCTEL, Inc. | 36.25 | 0.89 | 1.58 | 14.54 | 16.76 |
| QLTI | QLT Inc. | 27.56 | 0.87 | 1.4 | 3.1 | 13.88 |
| RCMT | RCM Tech | 16.8 | 0.52 | 2.73 | 1.74 | 4.24 |
| USAP | Universal Stainless/Alloy | 21.18 | 0.85 | 2.89 | 6.99 | 8.94 |
| VOXX | Audiovox Corporation | 16.48 | 0.44 | 2.14 | 5.79 | 3.98 |
| WSTL | Westell Tech | 9.58 | 0.97 | 1.46 | 10.03 | 4.29 |
| List with added criteria: | ||
| Ticker | Company | EPS Growth Next 5 Years |
| ACET | Aceto Corp. | 22 |
| CACH | Cache Inc. | 13.33 |
| DIVX | DivX, Inc. | 20 |
| HDNG | Hardinge Inc. | 30 |
| HOTT | Hot Topic Inc. | 15 |
| RCMT | RCM Technologies Inc. | 15 |
| USAP | Universal Stainless & Alloy Products Inc. | 16 |
data source: Finviz
Author's disclosure: None.
