Category Archives: tsco

Top Stocks Based on PEG/Momentum

I have begun conducting the following screen on a monthly basis.  Early results have been positive, especially in a bullish environment like the current one.  February’s list is here and January’s here.  The screen looks for the following:

  1. earnings growers still reasonably priced as judged by the PEG ratio
  2. low debt
  3. a history of high return on equity and investment, and
  4. price momentum as gauged by the percentage the stock is trading to its 250 day high.

January’s list returned 1.39% vs .57% for SPY.  February’s list returned a solid 11.78% vs. 6.77% for SPY.  The top stock for February’s list was Techwell (TWLL), which returned over 49% in one month.  For the full list of stocks and results, please see the right hand side of Scott’s Investments.

With the US equity markets near an 18 month high, this list will be more expansive than in other, less bullish periods since it looks for stocks near 250 day highs. It has tested well historically in bullish periods.  Strategies an investor could use to avoid drawdowns would be to either a) abandon this type of strategy entirely when the S&P 500 or another major index is below a long term moving average, or b) hedge positions with a short option strategy on an equity index or ETF like SPY.

Two possible tools an investor could use to conduct this screen on his/her own are stockscreen123 or Finviz.  This screen was conducted using stockscreen123.

No positions in stocks mentioned

Ticker Name Trend Analysis
EZPW EZCORP, Inc. Here
MDF Metropolitan Health Networks, Here
FCFS First Cash Financial Services Here
TSCO Tractor Supply Company Here
FOSL Fossil, Inc. Here
JOSB Jos. A. Bank Clothiers, Inc. Here
DECK Deckers Outdoor Corporation Here
PTI Patni Computer Systems Limite Here
MANT ManTech International Corpora Here
ARO Aeropostale, Inc. Here
MD Mednax Inc. Here
AFAM Almost Family, Inc. Here
TRLG True Religion Apparel, Inc. Here
AAON AAON, Inc. Here
LHCG LHC Group, Inc. Here
VLCM Volcom, Inc. Here
OMPI Obagi Medical Products, Inc. Here
AEO American Eagle Outfitters Here
CHSI Catalyst Health Solutions, In Here
CTRN Citi Trends, Inc. Here
URBN Urban Outfitters, Inc. Here
MA MasterCard Incorporated Here
CPLA Capella Education Company Here
STRA Strayer Education, Inc. Here
BWLD Buffalo Wild Wings Here
QCOR Questcor Pharmaceuticals, Inc Here

List of Top Momentum & Low PEG Stocks

I conducted a screen in January which looked for “a) earnings growers still reasonably priced as judged by the PEG ratio, b) low debt, c) a history of high return on equity and investment, and d) price momentum as gauged by the percentage the stock is trading to its 250 day high.”

As I promised in the original article, here is how the original 8 performed since the open on January 28th. until the close February 24th.  I have also added a link on my blog with the spreadsheet results. The list is not a blind buy and hold suggestion but I think an investor could find profits by further investigating the list or employing a disciplined trading strategy which includes stop losses, such as the one I detailed here.  The original 8 outperformed the S&P 500 by a wide margin, but underperformed a common small cap value ETF.

No positions in stocks mentioned

Symbol Company Trend Analysis 1/28/10 Open 2/24/10 Close Return
CNU Continucare Corporation Here 5.14 4.57 -11.09%
EZPW EZCORP, Inc. Here 18.27 19.86 8.70%
LHCG LHC Group, Inc. Here 32.43 30.7 -5.33%
DECK Deckers Outdoor Corporation Here 103.23 102.03 -1.16%
AZO AutoZone, Inc Here 156.69 164.96 5.28%
INTC Intel Corporation Here 20.3 20.7 1.97%
PTI Patni Computer Systems Limite Here 19.7 21.12 7.21%
PMTC Parametric Technology Here 16.65 17.57 5.53%
1.39%
Benchmarks
SPY S&P 500 ETF Here 110.19 110.82 0.57%
VBR Small Cap Value ETF Here 54.33 55.73 2.58%

Running the same screen on February 24th using stockscreen123, I come up with the following list which I will update again in about a month.  You can track the portfolio on the right hand side of my blog under the name ‘Low PEG High Momentum’:

Ticker Name Trend Analysis
EZPW EZCORP, Inc. Here
PTI Patni Computer Systems Limite Here
TSCO Tractor Supply Company Here
JOSB Jos. A. Bank Clothiers, Inc. Here
CNU Continucare Corporation Here
FOSL Fossil, Inc. Here
FCFS First Cash Financial Services Here
LHCG LHC Group, Inc. Here
DECK Deckers Outdoor Corporation Here
NSR Neustar, Inc Here
AZO AutoZone, Inc. Here
CMG Chipotle Mexican Grill, Inc. Here
AAPL Apple Inc. Here
GILD Gilead Sciences, Inc. Here
AAON AAON, Inc. Here
CPLA Capella Education Company Here
STRA Strayer Education, Inc. Here
BIDU Baidu, Inc.(ADR) Here
TWLL Techwell, Inc. Here
WWW Wolverine World Wide, Inc. Here
NVO Novo Nordisk A/S (ADR) Here
CAGC China Agritech Inc. Here
DWA DreamWorks Animation SKG, Inc Here
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Read more on Price to Earnings Growth at Wikinvest