5 Value Stocks Worth Considering

by: Scott's Investments

I have taken a recent interest in running deep value screens in an attempt to expand my investing horizons beyond the basic trend following and momentum systems I regularly track on Scott's Investments. Yesterday's screen looked for stocks trading below book value with low debt, high relative cash, cash flow, and forward earnings. Today's screen is an expansion of that screen with some added criteria:

Forward P/E > 0
Price/Cash < 3
Price/Free Cash Flow < 15
Debt/Equity < .4
Price/Book < 1
Current Ratio > 3
Return on Assets > 0%
Return on Equity > 0%
Annual EPS Growth Next 5 Years > 0

The added criteria of positive ROA and ROE is an attempt to filter out companies that are bleeding assets and equity. Each individual criteria as an isolated element are not strict but when combined as an aggregate screen the goal is to create a list of potential value candidates. These screens are not a 'buy list' but are intended for further investigation. Aceto Corp. (NASDAQ:ACET), QLT, Inc. (QLTI), and DivX (DIVX) are the three stocks which also appeared on yesterday's screen. I debated keeping the Debt/Equity requirement at under .1 but decided to expand it to .4 for more results:

Ticker Company Trend P / B P / Cash ROA ROE Debt / Equity
ACET Aceto Corp. Here 0.89 2.5 2.46% 3.55% 0
AOB American Oriental Bioengineering Inc. Here 0.89 2.93 7.07% 11.76% 0.34
CRDN Ceradyne Inc. Here 0.74 2.14 1.83% 2.47% 0.13
DIVX DivX, Inc. Here 0.93 1.22 1.38% 1.56% 0
QLTI QLT Inc. Here 0.88 1.42 1.38% 1.75% 0

Author's Disclosure: No stock positions