14 Fundamentally Sound Stocks with Strong Technicals - Scott's Investments

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14 Fundamentally Sound Stocks with Strong Technicals 0 comments

Jun 28, 2011 5:50 PM | about stocks: AIT, AVAV, BBBY, DTV, EZPW, FCFS, HUM, NSP, NSR, IQNT, TRLG, WTSL

I update the following portfolio/screen on a monthly basis on Scott's Investments. May's list of 24 stocks is here and the top 10 rated stocks returned an average of .11% versus -3.95% for SPY. The entire list of 24 stocks last month returned an average of -1.83%.

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.

14 stocks qualified for this month's list. This tells us that limited individual stock momentum exists in the market and the fundamental factors on the list can still be found among the high momentum stocks. However, the number of qualifying stocks is less than last month's list and substantially less than April's 34 stocks, which is not surprising given that overall equity momentum has waned in May and June.

Two stocks are intriguing on this month's list. EZCORP (EZPW), a short-term credit service and pawn shop operator, has been in a strong long-term uptrend and has repeatedly made this screen. It has very little debt, a PEG ratio of .83, return on equity of over 20%, and has projected annual earnings growth of 15% over the next 5 years. The weekly chart courtesy of Finviz is below. From a technical perspective, I would wait for a close above $33 before considering a long entry :

Applied Industrial Technology (AIT) momentum has slowed in recent weeks but it still remains near the top of its range as indicated by the weekly chart below. AIT is an industrial equipment wholesaler. It has a yield of 2.22% and PEG of .87. It has no debt and has 5 year earnings growth projected at 17% annually:

Ticker	Name	Industry	6/27/11 Update	Rank	MktCap	PEGLT
AIT	Applied Industrial Technologi	Misc. Capital Goods	Here	98.5	1448.27	0.9
EZPW	EZCORP, Inc.	Consumer Financial Services	Here	97.52	1601.08	0.83
NSR	Neustar, Inc	Communications Services	Here	95.1	1898.46	0.82
TRLG	True Religion Apparel, Inc.	Apparel/Accessories	Here	94.96	716.08	0.76
NSP	Insperity Inc	Business Services	Here	94.49	773.5	0.89
BBBY	Bed Bath & Beyond Inc.	Retail (Specialty)	Here	93.38	14098.18	0.96
FCFS	First Cash Financial Services	Retail (Specialty)	Here	92.81	1218.26	0.91
MDF	Metropolitan Health Networks,	Healthcare Facilities	Here	91.85	200.57	0.72
WTSLA	The Wet Seal, Inc.	Retail (Apparel)	Here	90.49	451.84	0.92
DTV	DIRECTV	Broadcasting & Cable TV	Here	85.94	36661.75	0.74
MA	MasterCard Incorporated	Consumer Financial Services	Here	78.77	33086.45	0.92
CRR	CARBO Ceramics Inc.	Constr. - Supplies & Fixtures	Here	77.12	3470.62	0.97
TNDM	Neutral Tandem Inc.	Communications Services	Here	76.11	586.53	0.95
AVAV	AeroVironment, Inc.	Aerospace & Defense	Here	61.97	758.79	0.68

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Stocks: AIT, AVAV, BBBY, DTV, EZPW, FCFS, HUM, NSP, NSR, IQNT, TRLG, WTSL

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