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15 Stocks To Avoid Based On Valuation, Momentum And Trading Volume

Ruerd Heeg profile picture
Ruerd Heeg


  • Here is a new article with unknown short candidates. I find these stocks by ranking them on valuation metrics, momentum and trading volume.
  • My impression is such stocks are declining but without many investors speculating on catalysts for the stock to decline. So no crowded shorts.
  • I discuss 6 stocks in more detail below.
  • Looking for a helping hand in the market? Members of Global Deep Value Stocks get exclusive ideas and guidance to navigate any climate. Learn More »

Like last month and the month before I ran my quantitative algorithm to find new stocks that should be avoided. This algorithm ranks stocks on several criteria: valuation metrics, trading volume, momentum and a metric for measuring how much trading is affected by events. For details see this blog article.

See results below for this month:

15 stocks that should be avoided based on momentum, valuation and trading volumeWith 6 stocks Japan is well represented in the list. Japan took similar monetary stimulus measures as the US and Europe. It did that even though corona did not affect the country as much as the US and Europe. As a result the Nikkei index increased even more than the S&P 500. The decline started at the same time as the decline of the S&P 500. So far this decline was also more than the decline of the S&P 500.

If we look at the yen, it seems more than 5 years of excessive monetary stimulus might have been too much for Japan since recently the yen sharply declined:

USD.JPY 1 year chartThe Japanese yen might further decline resulting in lower stock prices for Japanese companies purchasing goods from abroad. In particular, a rising oil price is another negative for shares of the 2 Japanese airline stocks in the list: ANA Holdings (ticker 9202 in Tokyo) and Japan Airlines Co (ticker 9201 in Tokyo).

A large part of the operations of Seibu Holdings (ticker 9024 in Tokyo) are tourism and public transport in Japan. Tourism and public transport might pick up fast when everybody takes a vaccine. But the real problem is probably the company has too much debt. Even in good times it takes too long to repay the debt. Right now Tangible Assets/Tangible Equity is more than 5. In the current low interest rate environment that might be bearable but if this crisis causes interest rates to increase this company has

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This article was written by

Ruerd Heeg profile picture
As a mathematician (Ph.D.) I use 7 quantitative strategies with statistically extremely high returns. I select these cheap companies with software comparing thousands of global stocks on value metrics, liquidity, quality metrics, and momentum. I focus on global nanocaps and net-nets. Check Turning Rough Stones: turningroughstones.substack.com

Analyst’s Disclosure: I am/we are short AFLYY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Global Deep value stocks is a long only newsletter. I do not discuss ideas like the ones presented here at Global Deep Value Stocks.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

4corners profile picture
Agree on your analysis for PSXP.
thank you for sharing your analysis. I can understand several of the international air carriers, but would you care to explain why KMI is on your list? Pipeline seems to be a good business
Ruerd Heeg profile picture
The list is pure quantitative, so not based on any forward thinking. As shown in the table Kinder Morgan is a mix of poor momentum, overvaluation and high trading volume. I have not looked into KMI specifically.
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