22 Top Stocks Based on PEG and Price Momentum - Scott's Investments

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22 Top Stocks Based on PEG and Price Momentum 0 comments

Oct 26, 2010 9:58 AM | about stocks: AAPL, AZO, CNU, DDMX, DECK, DRQ, EZPW, FCFS, FSLR, IDCC, JOSB, LRCX, HUM, MSM, QCOR, TXN, USNA

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I conduct the following screen on a monthly basis. Early out-of-sample results have been mixed, performing well during bullish environments and poorly during bearish/choppy markets. Last month's list is here and returned an average of 4.91% for the 10 stocks on the list versus 3.34% for SPY. The top 5 stocks on the list returned 7.21%.

August's list here, July's list is here, June's list is here, May's list is here, Aprils' list is here, March's list is here, 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.

August's list returned a whopping 16.17% versus 7.87% for SPY. It is worth noting that list had very few stocks that qualified for the list, three in total.

When the screen results in more than 5-10 stocks I have also started tracking returns of the top 5 or 10 stocks at the beginning of each list (when more than 5 stocks qualify). The top stocks are selected based on fundamental factors. For the full list of stocks and results, please see the right hand side of Scott's Investments.

The screen has tested well historically in bullish periods so 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 position in SH or write a short option strategy on an equity index or ETF like SPY.

This month's list contains 22 stocks versus 12 last month. 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.

No positions in stocks mentioned

Ticker	Name	Trend	Rank	MktCap	Industry
LRCX	Lam Research Corporation	Here	99.52	5391.68	Semiconductors
MDF	Metropolitan Health Networks,	Here	98.97	161.77	Healthcare Facilities
DDMX	Dynamex, Inc.	Here	98.59	205.6	Air Courier
EZPW	EZCORP, Inc.	Here	98.31	1063.6	Consumer Financial Services
DECK	Deckers Outdoor Corporation	Here	98.29	2012.1	Footwear
CNU	Continucare Corporation	Here	96.9	274.91	Healthcare Facilities
JOSB	Jos. A. Bank Clothiers, Inc.	Here	96.19	1232.07	Retail (Apparel)
TXN	Texas Instruments Incorporate	Here	96.07	34254.3	Semiconductors
FCFS	First Cash Financial Services	Here	93.89	886.4	Retail (Specialty)
IDCC	InterDigital, Inc.	Here	93.83	1316.75	Communications Equipment
USNA	USANA Health Sciences, Inc.	Here	90.46	622.77	Personal & Household Prods.
MSM	MSC Industrial Direct Co., In	Here	88.91	3665.49	Misc. Capital Goods
AAPL	Apple Inc.	Here	88.08	281633.31	Computer Hardware
AZO	AutoZone, Inc.	Here	82.16	10587.51	Retail (Specialty)
TSM	Taiwan Semiconductor Mfg. Co.	Here	79.86	54911.73	Semiconductors
SNHY	Sun Hydraulics Corporation	Here	77.9	525.07	Misc. Fabricated Products
CTCM	CTC Media, Inc.	Here	72.52	3653.59	Broadcasting & Cable TV
NTES	NetEase.com, Inc. (ADR)	Here	68.61	5099	Casinos & Gaming
DRQ	Dril-Quip, Inc.	Here	68.39	2678.87	Oil Well Services & Equipment
CPRT	Copart, Inc.	Here	63.99	2856.68	Retail (Specialty)
QCOR	Questcor Pharmaceuticals, Inc	Here	55.42	652.16	Biotechnology & Drugs
FSLR	First Solar, Inc.	Here	44.35	12452.53	Semiconductors

Disclosure: none

Stocks: AAPL, AZO, CNU, DDMX, DECK, DRQ, EZPW, FCFS, FSLR, IDCC, JOSB, LRCX, HUM, MSM, QCOR, TXN, USNA

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