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Top 10 Stock Screening Strategies That Make Money are proven profitable trading strategies and unique ways to screen for winning stocks. These strategies were with and backtested in the Research Wizard stock screening and backtesting program.
Stock picks recently identified by some of the Top 10 Stock Screening Strategies include Herbalife Ltd. (NYSE: HLF), Knight Capital Group, Inc. (Nasdaq: NITE), Big Lots, Inc. (NYSE: BIG), Advocat, Inc. (Nasdaq: AVCA) and Carpenter Technology Corp. (NYSE: CRS).
View all 10 strategies at: http://at.zacks.com/?id=4326
The Upgrades and Revisions 2 strategy focuses primarily on stocks with upward Earnings Estimate Revisions and Rating Upgrades. This screen generates approximately 8-10 stocks a month, has an excellent win ratio (74%) and has shown consistently impressive returns year after year.
Herbalife Ltd. (NYSE: HLF), a company that is trading near its 52-week high, is one of the stocks that fulfills the requirements of the Upgrades and Revisions 2 screen. One of HLF’s formidable characteristics is its five year historical growth rate of 53%. The company experienced a record fourth quarter, which included earnings per share 79 cents. The result was 8.22% ahead of the consensus estimate. In fact, earnings per share topped analyst expectations each time over the past five consecutive quarters, and during those five quarters, each earnings per share total exceeded the previous one.
Many investors tend to believe that P/E Ratios of 20 or less and Price/Book Values of 1.0 or less are these so-called magic numbers. Statistics, however, prove otherwise. So instead of screening for ‘low’ valuations based on an absolute number, the ‘Magic Numbers’? and Relative Valuations strategy employs a relative measure methodology, searching for companies that are outperforming their industries on earnings but are ‘undervalued’ to their group in terms of valuations.
Knight Capital Group, Inc. (Nasdaq: NITE) is also trading near a 52-week high as that is one of the requirements for this screening strategy. The company offers appealing valuations relative to its peers. Knight Capital Group’s P/E ratio is an attractive 14%, and its price/book ratio is at about 1.8%.
Investors looking for a reliable way to trade some of the best of the Zacks #1 (Strong Buy) stocks, should try the Filtering Zacks Rank strategy, which will enable and individual to trade fewer stocks for bigger returns. Since there are typically over 200 stocks on the Zacks #1 Rank list (Strong Buy) at any time, this strategy applies two filters. One filter looks for positive current quarter estimate revisions over the last four weeks. The other filter screens for positive average broker rating changes over the last week.
Big Lots Inc. (NYSE: BIG) is one example of a company that fits the Filtering Zacks Rank strategy thanks to bullish earnings estimate revisions among other strong characteristics. Two out of four covering analysts upped fiscal first-quarter earnings forecasts to 33 cents per share from last month’s 27 cents. The company recently posted record fourth-quarter earnings per share, which came in about 11% ahead of the consensus estimate.
The Return on Equity (ROE) strategy is based on a company’s ROE (ROE = income / common equity). Looking at a company’s ROE is one of the quickest ways to see whether a company is creating assets or gobbling up investors’ cash.
Advocat, Inc. (Nasdaq: AVCA), a Zacks Rank #1 (Strong Buy) company, is creating assets for shareholders as evidenced by its outstanding return on equity (ROE) of 96.82%. With a price to sales ratio of 0.25, the healthcare company also offers an appealing valuation. In mid-March, Advocat reported strong year 2007 results with revenue that grew 14.2% on a year-over-year basis. Operating income increased by 10.7%.
Studies have shown that almost all of the most successful stocks in the past had displayed accelerated earnings BEFORE their most impressive price moves. Increasing ‘percentage earnings growth’ (consistently improving from the company’s prior percentage of earnings growth) can often be the difference between good stocks and great stocks. The Earnings Acceleration strategy helps investors find the great stocks.
Carpenter Technology Corp. (NYSE: CRS) is one of those companies that has seen acceleration in earnings. In late January, the steel and iron company delivered a solid fiscal second quarter. Earnings per share of $1.17 topped the consensus estimate by 8% and eclipsed the year-ago total. Noting that it was a record quarter, Anne Stevens, chairman, president and chief executive officer, said, "We continued to experience strong demand from the energy market, which also contributed to the 33% jump in our international sales. Growth in these markets helped offset domestic weakness in our economically sensitive markets, including automotive, consumer, and industrial.
About Top 10 Stock Screening Strategies That Make Money
This report that spells out all the best stock screening strategies in the Research Wizard. Top 10 Stock Screening Strategies That Make Money shows you exactly how to use this revolutionary tool to pick stocks that make you money. Get the report today: http://at.zacks.com/?id=4327
Use the Research Wizard to run the aforementioned screens on your own, or to test any of the other proven, profitable strategies that come with the program. Also, learn how to create and test your own winning trading strategies that tell you when to buy and when to sell. It’s easy to do. Sign up now for your two-week FREE trial to the Research Wizard and start making better decisions today: http://at.zacks.com/?id=4328
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=1841
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About Research Wizard and Backtesting
The performance calculations for the Research Wizard strategies were produced through the backtesting feature of the Research Wizard using the DBCMHIST database and consist of the total return (price changes + dividends) of an equal weighted portfolio. Returns are calculated on a specified periodic basis (most often one or four weeks) and assume no transaction costs. The portfolio is rebalanced at the start of each new period. Returns can be stated as either annualized or compounded.
Stock trading/investing involves risk and you can lose some or all of your investment. Hypothetical or backtested results may not always be duplicated in the real world. Backtesting can at times produce an unintended look-ahead bias. Results can also at times be over or understated due to the exclusion of inactive companies. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading, not the least of which is the ability to withstand losses or to adhere to a particular trading strategy in spite of trading losses. These are material points which can also adversely affect actual trading results. The backtested results prepared for these materials were done using the DBCMHIST database and consisted of only active companies. The Research Wizard program has been aligned, to the extent possible, to eliminate look-ahead bias. Zacks however cannot make any guarantees in regard to this or any other possible limitation.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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