John V.'s  Instablog

This week's results from my Super Stock Screener.  Screening is an excellent way to begin finding winning stocks.

My thoughts:  This was a tumultuous week in the market as we saw stocks get hit on bad news seemingly from every direction.  From a screening perspective I expected lots of stocks to drop off the screen from decreases in Relative Strength or other factors, but strangely the number of stocks in the screening results increased by one(!), from 52 up to 53.  This was definitely not the result I expected so I will interpret this as a sign that stocks are fighting to hold up during this market decline.

There were five stocks that did fall off the screen, notably Agilent Technologies (NYSE: A) and Veriphone Holdings (NYSE: PAY), and six new additions as well.  Of the six I see that Alexion Pharmaceuticals (NASDAQ: ALXN) is back again for like the 4th time or so, and also Illumina (NASDAQ: ILMN) and newcomers Body Central (NASDAQ: BODY) and Bridgepoint Education (NYSE: BPI).  I also recognized one other new stock, Zagg Inc. (NASDAQ: ZAGG) as I know a trader who had a love/hate relationship with that stock not long ago .

The fact that new stocks continue to show on the screening results is very interesting because in a market downturn wouldn't you think that the screen would shrink?  Me too, so if this is an indication of strength then let's hope it sticks around.

I wrote recently that "In down markets strong stocks tend to go sideways while weak stocks go down a lot.  In good markets this is flipped as strong stocks go up a lot while weak stocks tend to go sideways." and I think this will play out with many of the names in the below stock list.  Thus in a market-downturn there is not much to do regarding screening except to watch and take note of which stocks are weak and fall off versus those that are strong and stick around.

The strong stocks are the ones that will have the best chance of becoming the big winners in the next market up-cycle, so it will pay to watch closely and find which stocks these are.  When the time comes to act you will then be prepared and ready to buy, thus it is time well-spent until things improve.

As always this is not a buy list but rather a starting point for doing more research.  Stocks that are new are underlined and have an Asterisk (*) next to their company name.

Stock that fell off the Super Stock Screener results from May 21st are below:

Note: This screen is fairly wide (EPS>=45%, Sales>=25%, ROE>=10, RS>=88, Price within 20% of High) and I do have tighter screens as well.  To keep the screen results manageable I removed Industry Groups that I either do not believe in (Financial) or are so Commodity that I have no idea how to pick one from another (Oil&Gas).