Screening for Winners Message Board

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Strategies & Market Trends : Screening for Winners

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To: LemonHead who wrote (21)	3/17/1999 9:13:00 AM
From: JZGalt	of 45

Keith, These would be criteria which have worked recently (last 5-10 years) and they do keep you out of a ton of trouble if you just avoid anything under several billion dollars in market cap. As a first cut for an investor who wants to invest in Gorillas, this will screen out the cream of the crop. However when screening for very large gains in the market without relying on more and more people paying more and more for steady growth, it is sometimes better to look for smaller (under $1B) companies or companies which have fallen on temporary hard times. If analysts follow the stock and if they are growing eps much faster than the market, or have significant market share, then eventually they get "found". Depends on your timeframe. BTW, just as an example I bought a very small starter position in SAVLY yesterday. Debt/Market Cap = 2% ROA = 14% ROE = 19% But which market cap do I use? As of yesterday it had a market cap of $398 MM which would not be considered large, but if you go back to last year it had a market cap near $2B. On another point, I don't think that screening on current ROE and ROA allows you to select stocks whose fortunes are about to change. For instance another stock I own is ORB. 800MM Market Cap ROA = 3.49% ROE = 0.67% Debt/equity = 28% Your screen would just pass this one by without looking back. None of your criteria match. So why do I own this stock? I believe the eps growth is going to be outstanding for the next few years and they have a spinoff coming that is worth almost the entire market cap of the company. Obviously you cannot screen for things like this, but it does show you that a screen will not only include thing you want, but exclude some also. ---- Dave BTW, I'll be happy to sell you my shares if the market cap reaches $5 Billion again. ;-)

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