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Each month I update a fundamental/technical screen at Scott's Investments and track the results real-time. October's list of 11 stocks is here and the screen returned -2.53%, out performing SPY which returned -6.26% over the same time period. The screen is not intended as a comprehensive portfolio, but a list for further research, and proper risk management techniques should always be considered.

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.
  • The stocks are then ranked based on fundamental factors as compiled by stockscreen123.

Apple (NASDAQ:AAPL) was on last month's list but dropped off this month's list due to the stock's fading price momentum. Only three companies qualified for this month's list, primarily due to the recent equity market sell-off which resulted in many equities trading well below their 250 day high.

The three companies on this month's list are a diverse mix - True Religion (NASDAQ:TRLG), an apparel retailer, Questcor Pharmaceuticals (NASDAQ:QCOR), a biotechnology company, and NeuStar (NYSE:NSR), a communication provider. All three companies have appeared on this stock list in the past. They all sport little or no debt, a high historical return on equity and investment, and a PEG ratio below 1. Their price strength and momentum in the midst of an otherwise dismal equity market should be noted:

Ticker Name Trend SS123 Rank MktCap PEG LT ROE% 5YAvg ROI% 5YAvg
NSR Neustar, Inc Here 87.12 2319.56 0.94 17.96 16.84
QCOR Questcor Pharmaceuticals, Inc. Here 82.12 2595.62 0.92 43.34 42.57
TRLG True Religion Apparel, Inc. Here 78.89 823.18 0.82 28.88 27.84

Disclaimer: No current positions in stocks mentioned. Please note that Scott's Investments and its author is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott's Investments.

Source: 3 Low PEG, High Momentum Stocks