Consensus: Stocks That Pass the Most Screens
The First Cut explored the idea of consensus screening last January. We presented a list of 20 stocks that passed the greatest number of screening approaches tracked by AAII as of December 12, 2008. As a group, the consensus stocks went on to gain 41.9% through December 8, 2009, versus a 27.4% gain for the Wilshire 5000 index.
While you cannot automatically consider a group of consensus stocks to be a diversified portfolio, they may present a good First Cut for constructing your personal portfolio. Optimally, the group of screening approaches a stock passes is diverse enough to capture unique, yet desirable qualities.
This issue’s First Cut lists the stocks that passed the greatest number of screens as of November 30, 2009. Just under 1,000 stocks out of Stock Investor Pro’s 9,875-stock universe passed at least one screen. Only 18 stocks passed at least four screens, however, and these are the stocks that made the First Cut this month. As before, a few approaches—including both CAN SLIM screens, both MAGNET screens, and the Stock Market Winners screen—did not have any passing companies at the time of screening and therefore did not participate in the analysis.
The stocks are first ranked by the number of screens passed and then by their price-earnings ratio, a simple valuation measure. The annual earnings growth rate provides some feel for the historical performance of the company. The market cap (number of shares outstanding times share price) serves as an indication of company size. Short- and intermediate-term stock price performance is highlighted with relative price strength rank over the last 13 and 52 weeks.