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14 Fundamentally Sound Stocks with Strong Technicals

|Includes:Applied Industrial Technologies, Inc. (AIT), AVAV, BBBY, EZPW, FCFS, HUM, IQNT, NSP, NSR, T, 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 (NASDAQ: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 (NYSE: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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