Category Archives: Stock Screens

Contrarian Approach Screen

contrarian approach

Contrarian Approach is a simple screen which finds solid companies trading at low price ratios. The screen is inspired by David Dreman’s contrarian investment philosophy. Dreman believes strongly in market overreactions and the principle of mean reversion.

His research and professional experience shows that a diversified list of financially strong, adequately sized companies, currently out-of-favor with the market, “provide superior returns over time.” Read more»

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Value Composite #1 Screen

value composite

Value Composite #1 is a compilation of multiple value factors. Jim O’Shaughnessy, in his research, found that there was an “ongoing horse race” between which single factors performed the best.

While stocks with the lowest price-ratios always ended up as the best investment options, the best performing price-ratio continuously changed over various time periods.

This led O’Shaughnessy to build a “master value composite factor” which consistently outperforms any individual metric. Read more»

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Magic Formula Screen

magic formula

The Magic Formula is Joel Greenblatt’s successful attempt to quantify Warren Buffett’s principle of buying good companies at bargain prices. This strategy equally ranks companies based on return on capital and earnings yield.

By combining the top ranked stocks based on both metrics, the screen finds stocks that are highly profitable yet trading at low prices. In Greenblatt’s calculations, the Magic Formula returned over 30% annually from 1988 to 2004. Read more»

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NNWC Screen

nnwc

The Net-Net Working Capital (NNWC) stock screen is similar to the NCAV screen except it is more stringent.

Graham knew that companies undergoing liquidation would not necessarily sell all current assets at book value.

In order to add a level of safety, he felt it beneficial to discount the accounts receivables and inventories when calculating current assets. Read more»

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