BeanScreen for May 1, 2012

• Posted by Danny
• on May 1st, 2012

Of the 413 companies that made the cut for May, 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 its number of consecutive months on the list and % return (without dividends re-invested) during that time. Stocks checked off in the Buy Signal column are those we believe may be ripe for purchase.

This month we tweaked the category weightings a bit. Price Ratios now represent 15% of a stock’s WSB score, down from 18%, and Momentum (relative strength) was increased from 6% to 10%. We’re hoping this shift will improve the discounting mechanism towards value traps, since such stocks often show weak momentum as they get “cheap”.

As always, do your own due diligence cuz we ain’t pros! The BeanScreen is just an idea creator.

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. RES	78.7	✔	Oil & Gas Equipment/Services	10	-34.4
2. HITK	75.5		Generic Drugs	13	+17.8
3. EZPW	75.1	✔	Consumer Finance	33	+100.4
4. AAPL	74.8	✔	Personal Computers	10	+49.6
5. TNH	73.7		Agricultural Chemicals	6	+67.4
6. CF	73.4	✔	Agricultural Chemicals	3	+3.8
7. NTES	73.4	✔	Internet Software & Services	8	+58.1
8. CEO	72.4		Independent Oil & Gas	20	+8.9
9. BRLI	71.7		Medical Labs & Research	3	+5.9
10. SYNT	71.3		Information Technology Services	2	+7.0
11. INTC	71.0	✔	Semiconductor	4	+7.5
12. LULU	71.0		Textile Apparel	4	+17.4
13. CHL	70.7	✔	Wireless Communications	2	+0.5
14. QCOR	70.6		Biotech	1	0
15. GRMN	70.3		Scientific & Technical Instruments	57	-53.7
16. MED	70.0		Specialty Retail (Food)	1	0
17. RGR	69.9		Sporting Goods	3	+36.6
18. BKE	69.8		Apparel Stores	33	+74.6
19. PCLN	69.4		General Entertainment	1	0
20. QCOM	69.0	✔	Communication Equipment	1	0

 

In: QCOR, MED, PCLN, QCOM              Out: TRLG, TEO, BVN, DECK

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 – 15%
• Profit Margins – 15%
• Financial Condition – 15%
• Investment Returns – 15%
• Momentum – 10%
• 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 bench-marked and scored using our custom formula. A few other secondary parameters (1% weighting) are measured as well, such as Insider Ownership and Short Ratios.

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 arrive at a threshold level that may reveal a buying opportunity for the next few months and beyond.

Here’s a quick video demo:

 

  (Zoom in for better view)

 

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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