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I have begun conducting the following screen on a monthly basis. Early results have been positive, especially in a bullish environment like the current one. February's list is here and January's here. The screen looks for the following:

  • earnings growers still reasonably priced as judged by the PEG ratio
  • low debt
  • a history of high return on equity and investment, and
  • price momentum as gauged by the percentage the stock is trading to its 250 day high.

January's list returned 1.39% vs .57% for SPY. February's list returned a solid 11.78% vs. 6.77% for SPY. The top stock for February's list was Techwell (TWLL), which returned over 49% in one month. For the full list of stocks and results, please see the right hand side of Scott's Investments.

With the US equity markets near an 18 month high, this list will be more expansive than in other, less bullish periods since it looks for stocks near 250 day highs. It has tested well historically in bullish periods. Strategies an investor could use to avoid drawdowns would be to either a) abandon this type of strategy entirely when the S&P 500 or another major index is below a long term moving average, or b) hedge positions with a short option strategy on an equity index or ETF like SPY.

Two possible tools an investor could use to conduct this screen on his/her own are stockscreen123 or Finviz. This screen was conducted using stockscreen123.

Ticker Name Trend Analysis
MDF Metropolitan Health Networks, Here
FCFS First Cash Financial Services Here
TSCO Tractor Supply Company Here
FOSL Fossil, Inc. Here
JOSB Jos. A. Bank Clothiers, Inc. Here
DECK Deckers Outdoor Corporation Here
PTI Patni Computer Systems Limite Here
MANT ManTech International Corpora Here
ARO Aeropostale, Inc. Here
MD Mednax Inc. Here
AFAM Almost Family, Inc. Here
TRLG True Religion Apparel, Inc. Here
AAON AAON, Inc. Here
LHCG LHC Group, Inc. Here
VLCM Volcom, Inc. Here
OMPI Obagi Medical Products, Inc. Here
AEO American Eagle Outfitters Here
CHSI Catalyst Health Solutions, In Here
CTRN Citi Trends, Inc. Here
URBN Urban Outfitters, Inc. Here
MA MasterCard Incorporated Here
CPLA Capella Education Company Here
STRA Strayer Education, Inc. Here
BWLD Buffalo Wild Wings Here
QCOR Questcor Pharmaceuticals, Inc Here

Disclosure: No positions in stocks mentioned

Source: Top Stocks Based on PEG/Momentum