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.
|MDF||Metropolitan Health Networks,||Here|
|FCFS||First Cash Financial Services||Here|
|TSCO||Tractor Supply Company||Here|
|JOSB||Jos. A. Bank Clothiers, Inc.||Here|
|DECK||Deckers Outdoor Corporation||Here|
|PTI-OLD||Patni Computer Systems Limite||Here|
|MANT||ManTech International Corpora||Here|
|AFAM||Almost Family, Inc.||Here|
|TRLG||True Religion Apparel, Inc.||Here|
|LHCG||LHC Group, 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|
|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