Keep PICKS coming, but do they pass SCREEN #1 & 2?
What I was hoping for in creating a list of promising stocks and sectors was to find stocks that are fundamentally sound with a minimal short position, followed by a stock that passed T/A muster. (note: stocks under $5 typically would not fare well here, so they are excluded and fall into the speculative buy category based on promise)
SCREEN #1: Fundamentally Sound
PE
PE of competitors
PEG
EPS growth
EPS growth of competitors
Screen #2: Short position analysis
The last step if a stock passed #1 and #2, would be this but that would be done later after our list was created.
Final Step: T/A to determine timing (Stochastics, MACD, money flow, OBV, etc.)
EXAMPLE: ESST
Stocks like ESST seem ideal after putting it through the first screen, but one must also use Screen #2. It's short position must always be taken into account.
Nevertheless let's look at ESST's fundamentals, since even if there is a short position it may be temporary manipulation based on untrue rumors. If that's the case,
a panic sell may result and one may be able to pick up the stock at a very undervalued price (i.e. ESST hit $12+ intraday a few weeks ago). Often when shorts cover, the
fundamentals will be the reason the price rre-inflates.
So far none of the stock picks mentioned can be analyzed here. That doesn't mean they aren't good picks but are they perhaps a bit more of a gamble when data is not as available? Should we still put them on the LIST?
SCREEN #1: Basic Fundamentals
earnings.nasdaq.com`&symbol=RANGY`&symbol=CCEL`&symbol=ITGR`&symbol=AIRM`&symbol=ESST`&selected=ESST
PE = 13.88
PE of comptetitors = 83.57
PEG = .665
EPS growth = 119%
EPS growth of competitors = -13.71
SCREEN #2: Short Interest
Short Interest (as of 8-May-2002)
biz.yahoo.com
Shares Short 16.3M
Percent of Float 53.3%
Shares Short
(Prior Month) 12.5M
Short Ratio 4.41
Daily Volume 3.70M
The problem here is the out of date information, but it still identifies whether there is a temporary short situation. Remember that sometimes there is a valid
reason for a short position. Shorts often do better research than "longs", but lately manipulation and unfounded rumors have been more common. Still TYC has legitimately tanked, while ESST and AGM and ACF were tanked through manipulation, or so it appears. |
