I searched for profitable companies with an above average growth prospects that pay significant dividends and that technically are showing positive momentum.
I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.
The screen's formula requires all stocks to comply with all following demands:
- The stock is included in the Russell 1000 index. Russell Investment explanation:
The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market. The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected.
2. Earnings growth estimates for the next 5 years (per annum) is greater than 10%.
3. The PEG ratio is less than 1.50.
4. Dividend yield is greater than 1.4%.
5. 10-day moving average is above 20-day moving average, and the crossover happened 2 days or less prior to the start of the screen (Short term momentum indicator).
After running this screen on October 17, 2012 before the market open, I obtained as results the 5 following stocks:
Nordstrom Inc. (NYSE:JWN)
Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States.
Nordstrom has a forward P/E of 14.23 and a PEG ratio of 1.45. The average annual earnings growth estimates for the next 5 years is 12.38%. The forward annual dividend yield is 1.91%. During the month of October, the company announces its plans to open three more Nordstrom Rack stores, one in Cleveland, Ohio, one in downtown Chicago, Illinois and one in Auburn Hills just outside of Detroit. Nordstrom seems to be in an expansion phase. All these factors make the stock quite attractive.
Prudential Financial, Inc. (NYSE:PRU)
Prudential Financial, Inc. provides various financial products and services, including life insurance, annuities, retirement-related services, mutual funds, and investment management services in the United States, Asia, Europe, and Latin America.
Prudential Financial has a very low forward P/E of 7.39 and a very low PEG ratio of 0.67. The average annual earnings growth estimates for the next 5 years is 12.29% . The price to free cash flow for the trailing 12 months is very low at 2.16 and the price to sales is also very low at 0.52. The forward annual dividend yield is quite high at 2.50%. Among the 21 analysts covering the stock, six rate it a strong buy, eleven rate it a buy and four rate it a hold.
Everest Re Group Ltd. (NYSE:RE)
Everest Re Group, Ltd., together with its subsidiaries, underwrites reinsurance and insurance in the United States (U.S.), Bermuda, and international markets.
Everest Re Group has a very low forward P/E of 8.33 and a very low PEG ratio of 0.82. The average annual earnings growth estimates for the next 5 years is 11.67% . The price to free cash flow for the trailing 12 months is quite low at 11.13 and the price to sales is also quite low at 1.23. The forward annual dividend yield is 1.71%. All these factors make the stock quite attractive.
Southern Copper Corp. (NYSE:SCCO)
Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile.
Southern Copper has a forward P/E of 14.33 and a PEG ratio of 1.28. The average annual earnings growth estimates for the next 5 years is 10.05%. The forward annual dividend yield is very high at 4.57%. During the first half of 2012, the company's copper mine production increased by 16% compared with the first half of 2011, due to better ore grades and recovery of the Buenavista, La Caridad and Cuajone production. The SCCO stock seems to be a good investment right now.
Union Pacific Corporation (NYSE:UNP)
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, provides rail transportation services in North America. The company offers freight transportation services for agricultural products, including grains and related commodities, food, and beverage products; and automotive products.
Union Pacific has a low forward P/E of 12.99 and a low PEG ratio of 1.15. The average annual earnings growth estimates for the next 5 years is 13.92%. The forward annual dividend yield is 1.94%. Among the 29 analysts covering the stock, nine rate it a strong buy, 13 rate it a buy and seven rate it a hold.