Stock screener settings to identify the best value stocks
The following image illustrates the settings we applied in Ziggma’s free stock screener to identify the best opportunities in a shift to value stocks. While it is quite self-explanatory, we want to emphasize the most important aspects you need to pay attention to.
- Set the Ziggma valuation sub score slider at 75 or above to find stocks with attractive valuations.
- Look for growth. Many investors that follow a value-based investment approach forget that growth is the prerequisite for long term appreciation in a company’s value. Hence, we set the sliding scales in the growth category as follows: eps growth > 9%; revenue growth > 7%; 5-year constant average eps growth > 8%.
- Look for profitable companies. If a company is not profitable, you have the reason for why it’s cheap right there. Thus, we set the sliding scale for return on equity at > 15% for both the past year and the average over the past five years.
- Similarly, a weak balance sheet often makes a company’s stock cheap. This is because the market questions the company’s long term viability. Therefore we configure our fundamental stock screener so as to return only companies with a Ziggma Financial Position sub score greater than 70.
You can learn more about the Ziggma Scores in this blog article.
The Top Value Stocks Portfolio – as of mid-November 2020
The table below shows the portfolio holdings of the current “Top Value Stocks – Nov 20” portfolio. The “Fundamental” portfolio view is highly instructive and we recommend to pay close attention to it. It provides key performance indicators on growth, profitability and valuation on all portfolio companies in a convenient single view. In addition, it shows these KPIs on an aggregated basis at the portfolio level.
The key parameters for the Top Value Stocks Portfolio – Nov 20 are as follows:
- Average PE ratio: 23.7x
- ROE: 38.3%
- Rev Growth: 15%
- EPS Growth 65%
