Kevin Matras outlines one of the screens he’s been using in today’s tough market. Stocks in this week’s article are AGCO Corporation (NYSE: AG), Humana, Inc. (NYSE: HUM) and Pharmaceutical Product Development, Inc. (NASDAQ: PPDI). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109
Screen of the Week written by Kevin Matras of Zacks Investment Research:
I’m constantly asked – especially after weeks like last week – what I’m using in my own screens. Well, aside from the screens I write about in these articles and that we include in the Research Wizard program, I do like running this screen regularly – especially in times like these.
It starts off by looking for only those companies that outperformed the market (i.e., the S&P 500) over the last 4 weeks. When the market goes down the way it has, even great stocks will feel the pressure. But I’m looking for the ones that held up the best – believing that they have the most solid underpinnings to withstand the selling.
Then I’m narrowing that list to only those companies with upward earnings estimate revisions over the last 4 weeks and positive broker rating changes over the last week. This is a powerful indicator since companies receiving upward earnings estimate revisions have a tendency of receiving even more upward revisions. Also, companies receiving brokerage rating upgrades over the last week – especially when the market’s getting pounded - is another good sign.
The screen then looks for those companies trading within 10% of their 52 week high. (To narrow the list during periods when it gets too big, I’ll search for only the top 10 stocks trading closest to their 52-weeks highs.)
This screen picks some great winners. And incidentally, it also picked some great winners in 2007. I ran a series of tests using a four-week rebalancing period and the average annual total compounded return was 37%. For those more active traders, the returns were 48.2%, rebalancing it once a week. And for those in between (two-week rebalancing), the average annual total compounded returns were 48.6%.
Here are stocks from this week’s list (for 1/7/08):
AG AGCO Corp.
HUM Humana, Inc.
PPDI Pharmaceutical Product Development, Inc.
Add your own parameters to this screen and see how they work. Or start using this screen right now to find new companies. Even in tougher markets, there’s always something going up and doing great. The Research Wizard makes them easier to find so you can get in earlier and make more money. Sign up now for your two-week free trial to the Research Wizard and get the rest of the stocks on this list and see how you can start making better decisions today: http://at.zacks.com/?id=111
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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