7/03/2007

How to find out of favor stocks


A reader has written saying, he is not very comfortable trading momentum and he would like to research out of favor stocks before they make a move. I get lot of emails like this from people who are not psychologically attuned to trading momentum based system. They are in other words value investors.

So I spent some time thinking about it and developed this simple screen to find out of favor, neglected stock. Most such stocks have many problems currently , but they might become good turnaround candidates. In some cases the sector is cyclical and out of favor. So one has to investigate the stocks to find value amongst them. In the stock market, it just takes a catalyst to get a out of favor stock back in to favour. So looking at these kind of stocks is not a bad idea.

So here is very simple screen to find out of favor stocks. Again it uses Telechart.

  • This scan uses the Easyscan functionality of Telechart.
  • Set up a Easyscan with Watchlist=All Stocks. Then add following parameters.
  • Price Growth Rate 5 years= Rank 1 to 25
  • Price Growth Rate 3 years= Rank 1 to 25
  • Price Growth Rate 2 years= Rank 1 to 25
  • Price Growth Rate 1 years= Rank 1 to 25
  • Price Percent Change 26-week= Rank 1 to 25
  • This will give you around 200 stocks to work with. You can use classical value based matrix to shortlist candidates from this.
  • Alternatively you can use a 4% breakout scan like ( 100 * (C - C1) / C1) >= 4 AND V >= 1000 AND V > V1 to generate few candidate to look at on daily basis. After all an out of favor stock must start rallying for it to make money.
Now taking the basic idea you can create variations of this scan to find out of favor stocks. Because Mr Market uses imperfect logic to price stocks, you can often find mis priced opportunities in this set of stocks.

As of now if you run this scan it gives following 217 stocks:

ADG,Allied Defense Group (the) (Google  Yahoo  Earnings  Chart)
ADLR,Adolor Corporation (Google  Yahoo  Earnings  Chart)
ADPT,Adaptec Inc (Google  Yahoo  Earnings  Chart)
ADSX,Applied Digital Solution (Google  Yahoo  Earnings  Chart)
AGIX,Atherogenics Inc (Google  Yahoo  Earnings  Chart)
ALLB,Greater De Valley Svg Bk (Google  Yahoo  Earnings  Chart)
ALT,Alteon Inc (Google  Yahoo  Earnings  Chart)
AMC,American Mtg Acceptance (Google  Yahoo  Earnings  Chart)
AMM,AMS Health Sciences Inc (Google  Yahoo  Earnings  Chart)
ANLT,Analytical Surveys Inc (Google  Yahoo  Earnings  Chart)
ANLY,Analysts International (Google  Yahoo  Earnings  Chart)
ANPI,Angiotech Pharmaceutical (Google  Yahoo  Earnings  Chart)
APPA,Ap Pharma Inc (Google  Yahoo  Earnings  Chart)
AROW,Arrow Financial Corp (Google  Yahoo  Earnings  Chart)
ASBI,Ameriana Bancorp (Google  Yahoo  Earnings  Chart)
ASTT,Asat Holdings Ltd (Google  Yahoo  Earnings  Chart)
ATAR,Atari Inc (Google  Yahoo  Earnings  Chart)
AVAN,Avant Immunotherapeutics (Google  Yahoo  Earnings  Chart)
BBA,Bombay Inc (Google  Yahoo  Earnings  Chart)
BFT,Bally Total Fit Hldg (Google  Yahoo  Earnings  Chart)
BKHM,Bookham Inc (Google  Yahoo  Earnings  Chart)
BPOP,Popular Inc (Google  Yahoo  Earnings  Chart)
BRKL,Brookline Bancorp Inc (Google  Yahoo  Earnings  Chart)
BSX,Boston Scientific Corp (Google  Yahoo  Earnings  Chart)
BUCA,Buca Inc (Google  Yahoo  Earnings  Chart)
CADE,Cadence Financial Corp (Google  Yahoo  Earnings  Chart)
CAU,Canyon Resources Corp (Google  Yahoo  Earnings  Chart)
CDIC,Cardiodynamics Intl Corp (Google  Yahoo  Earnings  Chart)
CHFC,Chemical Financial Corp (Google  Yahoo  Earnings  Chart)
CLS,Celestica Inc (Google  Yahoo  Earnings  Chart)
CMLS,Cumulus Media Inc (Google  Yahoo  Earnings  Chart)
CMPP,Champps Entertainment (Google  Yahoo  Earnings  Chart)
CNBKA,Century Bancorp Inc Cl A (Google  Yahoo  Earnings  Chart)
COA,Coachmen Industries Inc (Google  Yahoo  Earnings  Chart)
CPWM,Cost Plus Inc California (Google  Yahoo  Earnings  Chart)
CRBC,Citizens Republic Bancorp Inc (Google  Yahoo  Earnings  Chart)
CRC,Chromcraft Revington Inc (Google  Yahoo  Earnings  Chart)
CREAF,Creative Technology Ltd (Google  Yahoo  Earnings  Chart)
CRGI,Corgi International Ltd ADR (Google  Yahoo  Earnings  Chart)
CRGN,Curagen Corp (Google  Yahoo  Earnings  Chart)
CSAR,Caraustar Industries Inc (Google  Yahoo  Earnings  Chart)
CSK,Chesapeake Corp (Google  Yahoo  Earnings  Chart)
CTE,Cardiotech Internat Inc (Google  Yahoo  Earnings  Chart)
CTIC,Cell Therapeutics Inc (Google  Yahoo  Earnings  Chart)
CTTY,Catuity Inc (Google  Yahoo  Earnings  Chart)
CTU,Chad Therapeutics A (Google  Yahoo  Earnings  Chart)
CYAN,Cyanotech Corp (Google  Yahoo  Earnings  Chart)
CYTO,Cytogen Corp (Google  Yahoo  Earnings  Chart)
CZNC,Citizens & Northern Corp (Google  Yahoo  Earnings  Chart)
DAIEY,Daiei Inc Adr (Google  Yahoo  Earnings  Chart)
DANKY,Danka Business Syst Adr (Google  Yahoo  Earnings  Chart)
DEVC,Devcon International Corp (Google  Yahoo  Earnings  Chart)
DHOM,Dominion Homes Inc (Google  Yahoo  Earnings  Chart)
DLK,Semotus Solutions Inc.  (Google  Yahoo  Earnings  Chart)
DLPX,Check Technology Corp (Google  Yahoo  Earnings  Chart)
DRL,Doral Financial Corp (Google  Yahoo  Earnings  Chart)
DROOY,DRD Gold Ltd Adr (Google  Yahoo  Earnings  Chart)
EMAK,Emak Worldwide Inc (Google  Yahoo  Earnings  Chart)
EMVL,Euroweb International Corp New (Google  Yahoo  Earnings  Chart)
ESCA,Escalade Inc (Google  Yahoo  Earnings  Chart)
ESCC,Evans & Sutherland Comp (Google  Yahoo  Earnings  Chart)
ETC,Environmental Tectonics (Google  Yahoo  Earnings  Chart)
FACT,First Albany Companies (Google  Yahoo  Earnings  Chart)
FAVS,First Aviation Srvcs Inc (Google  Yahoo  Earnings  Chart)
FBC,Flagstar Bancorp Inc (Google  Yahoo  Earnings  Chart)
FBMI,Firstbank Corp (Google  Yahoo  Earnings  Chart)
FBN,Furniture Brands Intl (Google  Yahoo  Earnings  Chart)
FBR,Friedman Billings Ramsey (Google  Yahoo  Earnings  Chart)
FCF,First Commonwealth Finl (Google  Yahoo  Earnings  Chart)
FCZA,First Citizens Banc Corp (Google  Yahoo  Earnings  Chart)
FFBC,First Financl BAncorp Oh (Google  Yahoo  Earnings  Chart)
FMDA,Futuremedia Plc Adr (Google  Yahoo  Earnings  Chart)
FMER,Firstmerit Corp (Google  Yahoo  Earnings  Chart)
FNBN,FNB United Corp (Google  Yahoo  Earnings  Chart)
FNLY,Finlay Enterprises Inc (Google  Yahoo  Earnings  Chart)
FONR,Fonar Corp (Google  Yahoo  Earnings  Chart)
FRNT,Frontier Airlines Inc (Google  Yahoo  Earnings  Chart)
GFSI,Goldleaf Financial Solutions Inc (Google  Yahoo  Earnings  Chart)
GNSS,Genesis Microchip Inc Delaware (Google  Yahoo  Earnings  Chart)
GNTA,Genta Incorporated (Google  Yahoo  Earnings  Chart)
GPTX,Global Payment Tech Inc (Google  Yahoo  Earnings  Chart)
GRIN,Grand Toys Intl Inc (Google  Yahoo  Earnings  Chart)
HDTV,Spatialight Inc (Google  Yahoo  Earnings  Chart)
HEII,Hei Inc (Google  Yahoo  Earnings  Chart)
HEPH,Hollis-eden Pharmaceut (Google  Yahoo  Earnings  Chart)
HNBC,Harleysville National Cp (Google  Yahoo  Earnings  Chart)
HORT,Hines Horticulture Inc (Google  Yahoo  Earnings  Chart)
HOTT,Hot Topic Inc (Google  Yahoo  Earnings  Chart)
HRVE,Harvey Electronics Inc (Google  Yahoo  Earnings  Chart)
HTCH,Hutchinson Technolgy Inc (Google  Yahoo  Earnings  Chart)
HTRN,Healthtronics Inc (Google  Yahoo  Earnings  Chart)
IFC,Irwin Financial Corp (Google  Yahoo  Earnings  Chart)
IG,Igi Inc (Google  Yahoo  Earnings  Chart)
IMH,Impac Mortgage Holdings (Google  Yahoo  Earnings  Chart)
IMX,Implant Sciences Corp (Google  Yahoo  Earnings  Chart)
INFO,Metro One Telecommunications Inc (Google  Yahoo  Earnings  Chart)
INFS,Infocus Corporation (Google  Yahoo  Earnings  Chart)
INSM,Insmed Inc (Google  Yahoo  Earnings  Chart)
INVX,Innovex Inc (Google  Yahoo  Earnings  Chart)
IRN,Rewards Network Inc (Google  Yahoo  Earnings  Chart)
ISON,Isonics Corp (Google  Yahoo  Earnings  Chart)
ISWI,Interactive Systems Worldwide (Google  Yahoo  Earnings  Chart)
ITP,Intertape Polymer Group (Google  Yahoo  Earnings  Chart)
IVC,Invacare Corp (Google  Yahoo  Earnings  Chart)
IVD,Ivax Diagnostics (Google  Yahoo  Earnings  Chart)
JACO,Jaco Electronics Inc (Google  Yahoo  Earnings  Chart)
JDSU,JDS Uniphase Corp (Google  Yahoo  Earnings  Chart)
JRC,Journal Register Co (Google  Yahoo  Earnings  Chart)
JXSB,Jacksonville Bancorp Inc Il (Google  Yahoo  Earnings  Chart)
KIRK,Kirkland's Inc (Google  Yahoo  Earnings  Chart)
KT,Katy Industries Inc (Google  Yahoo  Earnings  Chart)
LCRY,Lecroy Corp (Google  Yahoo  Earnings  Chart)
LGVN,Logicvision Inc (Google  Yahoo  Earnings  Chart)
LRP,Lorus Therapeutics Inc (Google  Yahoo  Earnings  Chart)
LRT,Ll&E Royporation (Google  Yahoo  Earnings  Chart)
LXBK,Lsb Bancshares Nc (Google  Yahoo  Earnings  Chart)
LXRX,Lexicon Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart)
MBTF,Mbt Financial Corp (Google  Yahoo  Earnings  Chart)
MCEL,Millennium Cell Inc (Google  Yahoo  Earnings  Chart)
MDWV,Medwave Inc (Google  Yahoo  Earnings  Chart)
MECA,Magna Entertainment Corp (Google  Yahoo  Earnings  Chart)
MEDW,Mediware Info Systems (Google  Yahoo  Earnings  Chart)
MEG,Media General (Google  Yahoo  Earnings  Chart)
MFCO,Microwave Filter Co Inc (Google  Yahoo  Earnings  Chart)
MFSF,Mutualfirst Financial (Google  Yahoo  Earnings  Chart)
MHO,M/i Homes Inc (Google  Yahoo  Earnings  Chart)
MII,MicroIslet Inc (Google  Yahoo  Earnings  Chart)
MKTY,Mechanical Technology (Google  Yahoo  Earnings  Chart)
MNI,Mcclatchy Company (The) (Google  Yahoo  Earnings  Chart)
MODT,Modtech Holdings Inc (Google  Yahoo  Earnings  Chart)
MZT,Matritech Inc (Google  Yahoo  Earnings  Chart)
NABI,Nabi Biopharmaceuticals (Google  Yahoo  Earnings  Chart)
NASI,North American Scientifc (Google  Yahoo  Earnings  Chart)
NEOL,Neopharm Inc (Google  Yahoo  Earnings  Chart)
NFI,Novastar Financial Inc (Google  Yahoo  Earnings  Chart)
NGEN,Nanogen Inc (Google  Yahoo  Earnings  Chart)
NPSP,Nps Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart)
NTBK,Net.Bank Inc (Google  Yahoo  Earnings  Chart)
NTII,Neurobiological Technolg (Google  Yahoo  Earnings  Chart)
NTN,NTN Buzztime Inc (Google  Yahoo  Earnings  Chart)
OAKF,Oak Hill Financial Inc (Google  Yahoo  Earnings  Chart)
OCFC,Oceanfirst Fincl Corp (Google  Yahoo  Earnings  Chart)
OFG,Oriental Financial Group (Google  Yahoo  Earnings  Chart)
ONB,Old National Bancorp In (Google  Yahoo  Earnings  Chart)
ONH,Orion Healthcorp Inc (Google  Yahoo  Earnings  Chart)
OPOF,Old Point Financial (Google  Yahoo  Earnings  Chart)
OSCI,Oscient Pharmaceuticals Corp (Google  Yahoo  Earnings  Chart)
OUTD,Outdoor Channel Holdings Inc (Google  Yahoo  Earnings  Chart)
OVRL,Overland Storage Inc (Google  Yahoo  Earnings  Chart)
PANC,Panacos Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart)
PARS,Pharmos Corp (Google  Yahoo  Earnings  Chart)
PCBI,Peoples Community Bncrp (Google  Yahoo  Earnings  Chart)
PCYC,Pharmacyclics Inc (Google  Yahoo  Earnings  Chart)
PILL,Proxymed Inc (Google  Yahoo  Earnings  Chart)
PLI,Proliance International Inc (Google  Yahoo  Earnings  Chart)
PLUG,Plug Power Inc (Google  Yahoo  Earnings  Chart)
POTP,Point Therapeutics Inc (Google  Yahoo  Earnings  Chart)
PPK,Polyair Inter Pack Inc (Google  Yahoo  Earnings  Chart)
PQE,Proquest Company (Google  Yahoo  Earnings  Chart)
PRCS,Praecis Pharmaceuticals (Google  Yahoo  Earnings  Chart)
PRK,Park National Corp (Google  Yahoo  Earnings  Chart)
PTA,Penn Treaty American Corp (Google  Yahoo  Earnings  Chart)
PTIX,Performance Tech Inc (Google  Yahoo  Earnings  Chart)
PWOD,Penns Woods Bancorp Inc (Google  Yahoo  Earnings  Chart)
PXG,Phoenix Footwear Grp Inc (Google  Yahoo  Earnings  Chart)
PXLW,Pixelworks Incorporated (Google  Yahoo  Earnings  Chart)
QFAB,Quaker Fabric Corp (Google  Yahoo  Earnings  Chart)
RIVT,Riviera Tool Company (Google  Yahoo  Earnings  Chart)
RLRN,Renaissance Learning Inc (Google  Yahoo  Earnings  Chart)
RVP,Retractable Technologies Inc (Google  Yahoo  Earnings  Chart)
SCB,Community Bankshares Sc (Google  Yahoo  Earnings  Chart)
SCKT,Socket Communications (Google  Yahoo  Earnings  Chart)
SCT,Scottish Re Group Limited (Google  Yahoo  Earnings  Chart)
SEMIQ,All Amer Semiconductor (Google  Yahoo  Earnings  Chart)
SFP,Salton Inc (Google  Yahoo  Earnings  Chart)
SKYE,Skyepharma Plc ADS (Google  Yahoo  Earnings  Chart)
SNT,Senesco Technologies (Google  Yahoo  Earnings  Chart)
SPA,Sparton Corp (Google  Yahoo  Earnings  Chart)
SPC,Spectrum Brands Inc (Google  Yahoo  Earnings  Chart)
SRT,Startek Inc (Google  Yahoo  Earnings  Chart)
SSFC,South Street Finl Center (Google  Yahoo  Earnings  Chart)
STEN,Sterion Inc (Google  Yahoo  Earnings  Chart)
STG,Stonepath Group Inc (Google  Yahoo  Earnings  Chart)
STL,Sterling Bancorp (Google  Yahoo  Earnings  Chart)
SYBR,Synergy Brands Inc (Google  Yahoo  Earnings  Chart)
TAGS,Tarrant Apparel Group (Google  Yahoo  Earnings  Chart)
TECUB,Tecumseh Products Cl B (Google  Yahoo  Earnings  Chart)
TELK,Telik Inc (Google  Yahoo  Earnings  Chart)
TMTA,Transmeta Corporation (Google  Yahoo  Earnings  Chart)
TOA,Technical Olympic Usa Inc (Google  Yahoo  Earnings  Chart)
TRMS,Trimeris Inc (Google  Yahoo  Earnings  Chart)
TRPS,Tripos Inc (Google  Yahoo  Earnings  Chart)
TRST,Trustco Bank Corp Ny (Google  Yahoo  Earnings  Chart)
TSTF,Teamstaff Inc (Google  Yahoo  Earnings  Chart)
TUTR,Plato Learning Inc (Google  Yahoo  Earnings  Chart)
TWP,Trex Co Inc (Google  Yahoo  Earnings  Chart)
TWTR,Tweeter Home Entertainmt (Google  Yahoo  Earnings  Chart)
ULGX,Urologix Inc (Google  Yahoo  Earnings  Chart)
UWN,Nevada Gold & Casinos (Google  Yahoo  Earnings  Chart)
VDM,Van Der Moolen (Google  Yahoo  Earnings  Chart)
VERT,Verticalnet Inc (Google  Yahoo  Earnings  Chart)
VEXP,Velocity Express Corp (Google  Yahoo  Earnings  Chart)
VFL,Delaware Inv Fl Ins Muni Inc (Google  Yahoo  Earnings  Chart)
VIAP,Via Pharmaceuticals (Google  Yahoo  Earnings  Chart)
VIRL,Virage Logic Corporation (Google  Yahoo  Earnings  Chart)
VLNC,Valence Technology Inc (Google  Yahoo  Earnings  Chart)
VLTS,Valentis Inc (Google  Yahoo  Earnings  Chart)
VOCL,Vocaltec Communications (Google  Yahoo  Earnings  Chart)
VRA,Viragen Inc (Google  Yahoo  Earnings  Chart)
VSGN,Vasogen Inc (Google  Yahoo  Earnings  Chart)
WFBC,Willow Financial Bancorp Inc (Google  Yahoo  Earnings  Chart)
WFII,Wireless Facilities Inc (Google  Yahoo  Earnings  Chart)
WHI,W Holding Company (Google  Yahoo  Earnings  Chart)
WPL,Wp Stewart & Co (Google  Yahoo  Earnings  Chart)
WWVY,Warwick Valley Telephone (Google  Yahoo  Earnings  Chart)
XJT,Expressjet Holdings Inc (Google  Yahoo  Earnings  Chart)
ZANE,Zanett Inc (Google  Yahoo  Earnings  Chart)


around 40 stocks from the list are up 15% plus in last 65 days from their lows. So if you are value investor, you may find this approach useful. As always do your own testing and modification.

In fact while developing this method I found other very good methods and some of them might have lot of potential. One of them I am testing to see how it performs over past data and might get added to Episodic Pivot scans.


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POPULAR POSTS

    14 comments:

    Bill said...

    I love it! A purely technical analysis method for finding value stocks!

    Pradeep, perhaps adding some fundamentals would help the system; require the stock have earnings, or require a growing book value per share, or perhaps an ROA or ROE above a certain threshold?

    Pradeep Bonde said...

    Thanks.
    That is what I am experimenting with, One cannot do those things in Telechart, so I am inputing this output to other software and testing some of things which you mentioned.
    The scan gives you a set of candidates for further study. More than 60% of them can be eliminated by using price/volume, but remaining stocks have some gems in them.

    Bill said...

    To some extent, the traditional "value" measures of price to book, price to earnings, or price to sales ratios incorporate both the technical aspect of "beaten down" and the fundamental aspect of "good companies," making value investing a "blend" of the technical and fundamental. What I've found is that low PE equates to "out of favor," but that unfortunately includes peaking stocks where Mr. Market doesn't think the current earnings will keep growing, so a purely technical measure of price loss over time is needed.

    Telechart has some output my broker's screen doesn't, etc for other screens. I have yet to find a single interface that allows for all the screening I'd like to do.

    If I may be so bold ... require moderate recent growth in earnings and long-term book value growth, and a debt ratio that isn't outrageous, and you might find several worth buying before breakout.

    QUIKTDR said...

    Pradeep,


    Do you do intraday scans or doyou rely upon your nightly scans exclusively?

    Pradeep Bonde said...

    quiktdr
    Mostly nightly scan.
    Bill
    There are many ways to look at it. Say if one is value oriented investor with no major investigative skill, one would just use some simple filters to chose from the list . Or wait for breakout, investigate and buy.
    If someone is really skilled value investor, he can further divide the list in to three types 1 junk like biotechnology and unrecoverable cases 2 Cigarette butts 3 genuine value.
    Now the third kind will be very few probably 5 to 10 in this list. That is where the rewards can be very high.

    Art said...

    Just for grins I added Price Per Share $5-max; Volume 1-Day 4103-Max. Then I did a custom date sort for the last month. Out of 12 I came up with 2 possibilities that were growing a little, one weak. What think ye of WPL?

    Because I am just playing around and really dont know what I'm doing, would you have any suggestions how this might be improved at this point in TC?

    I stand amazed at Telechart's potentials as I learn how you teach it what you want done.

    Thanks once again
    Art

    Mike said...

    Pradeep:

    I will look further at your technical approach to this. There are a few other good places to go where you can find good stocks using fundamental scans. A free example would be something like the MSN screener. I use the AAII (American Association of INdividual Investors) product which costs < $200/year for some of my scans.

    There are a few ways to look at this. One is to find stocks that are still good companies but have had a rough patch and are cheap relatively to their typical historical norms, which is how a very successful friend of mind finds value stocks. Stocks like HD, AIG and others fall into that category.

    Another way is to find stocks that are simply cheap relative to themselves, for instance a stock trading with a PEG ratio (price earnings to growth) that is low.

    The AAII system includes simulated results that goes back many years and one of the two systems that has blown away all others is one they created to mimic what a fellow named Zweig did. This is a hybrid growth/value screen or GARP (Growth at Reasonable Price). This and a small cap system have had the best cumulative an average results.

    One key, though, is that it is in my opinion, hard to trade these. You have to more "invest" in these and plan to hold them for at 6 months to 18 months, on average. With Momentum stocks activity is happening now and you just need to find a good time to jump on the train. With these stocks you sometimes have to wait and wait and wait. It's just a different mindset. I do some of both in my accounts but you need to be able to turn on and off different logic to handle it.

    Mike

    Pradeep Bonde said...

    1 When it comes to value strategy I am not very sure as to why one should use price cut offs. Also a stocks future price growth is not a function of current price.
    2 Volume cutoffs in value stocks also has same issues.

    Pradeep Bonde said...

    Previous response was for Art
    Mike
    Valid points. The ideal holding period for value stocks is 2 to 3 years.
    Within value investing if you are small investor, why focus on HD and AIG, there are much better opportunities in small caps. Plus all things about float, earnings acceleration come in play in value stocks also.
    I think you should read Dhando Investor by Pabrai. It is one of the better books on value investing in recent years.

    Bill said...

    It might be worth watching the values for 2-3 years and waiting on the acceleration. Sometimes they go from beain a value to being on the IBD 100 list in a year, after sitting stagnant for a long time.

    A really aggressive search for the best fundamentals and beaten down status will invariably find very small cap value stocks, along with a few large caps. The AAII screener for Piotroski values is a case in point.

    Pradeep Bonde said...

    Mis pricing is more common on small caps than large caps. Beaten downness is very good for value stock, it indicates sellers exhaustion.
    Value stock discover their value if they regain earnings power. That is why stocks like HD may not be best value stocks.
    Plus the more I study value approach, more I find that it is more a personal skill. Some value managers are better at discovering value using same tools. So screener alone may not be the only answer. Good value managers are also to certain extent good market timers, so they pick the stocks at right time.
    Momentum investing requires less skill.

    market operator said...

    Joel Greenblatt laid out a good value screener based on best ROC/ROA and earnings yield that doubled market averages. Might be something worth investigating...

    Ram said...

    I am new to technical analysis and always wondered how to pick the right stock and has never got an answer. Even if we choose any of the strategies you have listed it returns 20-30 (or even > 100) stocks at one time. How do we choose top 3 or 4 stocks out of these 20-30. Whenever i choose a stock out of these 20-30 somehow I feel the other stocks are going up rather than the one I bought :(

    Pradeep Bonde said...

    By using additional criteria like volume surge, relative linearity, closeness to recent high, number of previous breakouts, sector relative strength, EPS, and so on, you can reduce it to 1 or 2.