Every week we update our list of "high-quality' and "low-quality" stocks. As of this past Friday, 51 stocks make the "high-quality" list and 47 make our "low-quality" list. We use a subset of these stocks to generate a dollar-neutral model portfolio, which in turn helps us with the decision making in a long-only account. Additional stock and model portfolio ideas are available on Scribd or our website.
This week, one of the best stock ideas to appear on our screens is OshKosh (OSK). We have not seen a stock like this for some time, with high rankings across the board for relative value, operating momentum, analyst revisions momentum and fundamental quality. Given its high ranking, we would not be surprised if it starts appearing in a number quantitative portfolios as well as get placed on a number of sell side conviction lists.
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Nothing really catches our attention as a stand-out short idea on the low-quality side, though we do note that Massey Energy (MEE), which tumbled more than 7% this past Friday, no longer meets our criteria as a "low-quality" stock idea. With the recent price decline, relative value for this stock looks much more attractive. This stock will stay in our model short portfolios through the end of the month, but more aggressive investors may want to consider closing short positions now.