BeanScreen for January 1, 2012

  • Posted by
  • on January 1st, 2012

Of the 405 companies that made the cut for January, these 20 ranked highest for their overall fundamental strength. This is not a buy list, only a “fundy health” index. In the table below, each stock’s WSB score is noted, along with number of consecutive months on the list and percent return (without dividends re-invested) during that time.

To bring in the New Year, we’ve tweaked the BeanScreen a bit by adding a Momentum category and a new feature to the table below: the Buy Signal column.

By Momentum we mean Relative Strength (RS). We got the idea from an awesome blog post @ivanhoff made recently titled Mixing Value and Momentum. It’s really nothing new for us as we’ve always included the three, six and twelve month RS of a stock into our scoring calculations. Until today though, the RS made up just 3% of a stock’s overall WSB score. Now it will represent 6%. See all the categorical breakdowns and weightings farther down the page.

As for the Buy Signal, in the past inquiries have been made as to which stocks in the WSB20 might be attractive for purchase. While definitely not a concrete buy list, there are a few companies each month that catch our eye from a valuation standpoint. These stocks are denoted with a “✔”.

In creating the Buy Signal, we zero in on what we believe are the most critical aspects of a stock’s overall health: Growth Rates, Price Ratios, Profit Margins and Momentum. Deriving a sub-score from these four categories (we won’t bore you with the fine details here), we arrive at a threshold level that may reveal a buying opportunity for the next few months and beyond.

As always, do your own due diligence cuz we ain’t pros! The BeanScreen is nothing more than an idea creator…far from perfect.

Follow the Consecutive Months Tracker in real-time here.

This month’s returns.

 

   Stock

WSB Score

Buy Signal

Industry

Cons. Months in WSB20

% Return (no divy)

1. HITK

77.6

 ✔ Generic Drugs

9

+40.6

2. RES

74.8

 ✔ Oil & Gas Equipment/Services

6

-22.7

3. CEO

73.9

Independent Oil & Gas

16

-10.1

4. EZPW

72.2

 ✔ Consumer Finance

29

+97.2

5. DO

70.7

 ✔ Oil & Gas Drilling/Exploration

8

-25.0

6. TEO

70.3

Diversified Communications

2

-5.3

7. GRMN

70.0

Scientific & Technical Instruments

53

-60.9

8. TRLG

69.7

Textile Apparel

31

+55.1

9. TNH

68.8

Agricultural Chemicals

2

+4.9

10. AZN

68.5

Major Drug Manufacturer

20

+9.6

11. NTES

68.4

 ✔ Internet Info Provider

4

+17.5

12. BKE

68.2

Apparel

29

+54.5

13. RIMM

67.7

Diversified Communications

16

-70.2

14. VASC

66.7

Medical Instruments & Supplies

1

0

15. AAPL

66.6

Personal Computers

6

+3.7

16. CVX

66.6

Major Integrated Oil & Gas

1

0

17. MSFT

66.3

Application Software

2

+1.5

18. QCOR

66.3

Biotech

1

0

19. MED

66.2

Food Products

16

-49.4

20. CHL

66.0

Wireless Communications

1

0

 

In: VASC, CVX, QCOR, CHL              Out: NPK, FCFS, BHP, ATW

The 2nd Twenty (21-40)

The Farm System (41-100)


The BeanScreen is based on fundamentals. Each month hundreds of companies are screened and scored on a fundy health index ranging from 0-100. Over time an average score and rank is compiled for a select group of stocks. The higher the score, the stronger a company’s overall fundamentals. Here is the breakdown:

70-100 = very strong

60-69 = strong

40-59 = average

0-39 = weak

Below are the seven categories (with weighting) that contribute to a stock’s WSB score:

  • Growth Rates – 25%
  • Price Ratios – 18%
  • Profit Margins – 15%
  • Financial Condition – 15%
  • Investment Returns – 15%
  • Momentum – 6%
  • Management Efficiency – 4%

Within each category are an assortment of parameters that are uploaded into the BeanScreen via Randy Hamerlink’s stock market functions add-in program for Excel. The data is then benchmarked and scored using our custom formula. A few other secondary parameters (2% weighting) are measured as well, such as Insider Ownership and Short Ratios.

The BeanScreen is not a perfect system. It cannot fully detect value traps (working on that!) or fraud. It is strictly an idea generator, a tool in our investing shed. Backward looking by nature, it only determines those companies that have appeared to exhibit healthy fundamentals over the last few months to two years. Our goal is to sift out these stocks and then hunt for potential value plays.

 

 


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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