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Adjusting for the Real World: Testing Variations of Piotroski's Screen

by Cara Scatizzi

Adjusting For The Real World: Testing Variations Of Piotroski's Screen Splash image

The Piotroski screen has been one of AAII’s top-performing screens for a number of years. While the S&P 500 was down 1.0% year-to-date as of February 28, 2010, AAII’s Piotroski screen gained an unbelievable 96.4%. The positive gain can be attributed to two companies: January’s single passing company, J. W. Mays Inc. (MAYS); and February’s single passing company, Highway Holdings Limited (HIHO). As of this writing, no stocks meet the Piotroski criteria.

The Piotroski screen was also the only AAII screen to post a positive gain in 2008 (+32.6%). Each of our benchmark indexes posted a loss that year as well. Since inception, the screen has returned 3,995.9%, the largest cumulative gain in the group.

While these returns are impressive, consider these statistics: the average number of monthly holdings is four; and since the beginning of 1998, the screen has had 20 months where no companies met the screen criteria. Taking a closer look at 2008, there were five months when no companies passed (August 31, 2008, through the end of 2008). As the S&P 500 fell close to 30% during those five months, this screen was not invested in the market at all.

On paper, Piotroski’s selection strategy looks like a winner, but it is hardly an investable strategy in the real world. For this article, we loosened the criteria used in AAII’s fundamental stock screening and research program, Stock Investor Pro, to see if we could create a more investable strategy using Piotroski’s value investing philosophy.

AAII’s Piotroski in Brief

Joseph Piotroski is an accounting professor who examined if it was possible to improve upon a low price-to-book investing strategy by requiring additional measures of financial strength. (He defined low price-to-book as multiples that were in the lowest 20% of all stocks.) Piotroski observed that most companies trade with low price-to-book ratios because they are financially distressed. He developed a nine-point scale to measure improving financial strength.

In his study published in 2000, Piotroski compared the performance of “winners” (a score of eight or nine) and “losers” (a score of zero or one). He found that the winners outperformed the losers over the next year. In addition, when he included a ranking for price-to-book ratio, he found that within the “winners” portfolio (those stocks with a score of eight or nine), stocks in the lowest price-to-book-ratio deciles performed better than those with higher price-to-book ratios.

The nine-point scale rewarded one point for each criterion in three basic categories: profitability, capital structure, and operating efficiency.

Profitability

A company can earn up to four points for profitability. One point is awarded for meeting each of the following conditions (based on the most recent full fiscal year): positive return on assets, year-over-year improvement in return on assets, positive cash flow from operations, and cash flow from operations that exceeds net income. While these criteria may not seem too strict, Piotroski found that 40% of low price-to-book-value stocks reported losses in the prior two fiscal years.

Capital Structure

Three points are awarded for capital structure and the ability to meet future debt obligations. The first requirement is a year-over-year improving (or lower) debt-to-asset ratio. Piotroski measures liquidity by requiring a year-over-year improving (or increasing) current ratio.

Finally, Piotroski avoids companies that issued stock during the last fiscal year. Because the stocks meeting the low price-to-book ratio criterion tend to have depressed prices, he believes this is the wrong time to issue new stock and may signal a firm’s inability to generate sufficient funds internally.

Operating Efficiency

Year-over-year increases in gross margin and asset turnover rate account for the last two points awarded in the Piotroski scale.

Relaxing the Criteria

The screen originally created for and currently used in AAII’s fundamental stock screening program, Stock Investor Pro, requires a perfect score of nine to pass the screen.

See “What It Takes”  for a summary of the screen criteria.

We tested the Piotroski screen three ways using full-fiscal-year data: requiring a score of at least seven, requiring a score of at least eight, and requiring a perfect score of nine (this is AAII’s original Piotroski screen). For example, a score of seven means a company must meet at least seven of the nine criteria.

A potential risk with the screen is that as the fiscal year progresses and a company moves into its third and fourth quarters, financial situations change. The original screen, which uses only full-fiscal-year data, could be looking at information up to nine months old. To remedy this, we used trailing 12-month data (the most recent four quarters of data) and tested for scores of at least seven, at least eight, and a perfect nine.

This resulted in six unique screens, five of them new.

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The Results

Performance and Risk

Figure 1 shows the cumulative performance results graphically compared to the S&P 500 index along with the annual performance of all six screens and various indexes for comparison. Each of the six Piotroski screens have handily beat all of our benchmark indexes on a cumulative basis.

The original Piotroski screen still beats each of the variations. However, as discussed above, this is not a realistically investable strategy. The best-performing screen of the “investable” variations created for this article uses trailing 12-month data and a score of at least eight (cumulative gain of 1,570.3%).

The worst-performing variation used a perfect score of nine and screened variables using trailing 12-month data. Like the original Piotroski screen, it had many months with no passing companies. On average, only six stocks passed each month—not much better than the average of four for the original screen. The score-of-nine variation also lost 28.3% in 2009 when all of the other screens posted gains. This points to an obvious flaw in a strategy invested in very few stocks: If one or two holdings go sour, it can wreak havoc on the entire portfolio.

From a pure performance standpoint, it seems you will give up large returns by loosening the criteria slightly, but you must also consider risk. In the case of the Piotroski screen, risk is more than just standard deviation; it is in the low number of passing companies each month as well as the monthly turnover.

Not surprisingly, the average number of passing companies rises and the monthly turnover rate falls as we loosen the criteria from a required score of nine to eight and seven.

With a score of at least eight, the average number of holdings each month jumps to 26 using fiscal-year data and to 33 using trailing 12-month data. Allowing a score of seven provides you with an overwhelming average number of monthly passing companies (83 using fiscal-year data and 102 using trailing 12-month data).

Screen Characteristics

Table 1 lists the characteristics of the companies passing each screen variation compared to all exchange-listed stocks as of February 28, 2010. Note the absence of data for both of the nine-score screens as they had no passing companies at the end of February.

The screen that used a score of eight or more and trailing 12-month data has the highest median price-earnings ratio (higher even than the median for exchange-listed stocks) and the highest median 52-week relative strength. Is it possible that this adjustment has captured some elements of momentum better than the other variations? It is hard to say for sure, but this is an interesting development, to say the least.

  Piotroski
Score = 9
Piotroski
Score = 8
Piotroski
Score = 7
Exchange-
Listed
Stocks
 
Portfolio Characteristics (Median) Fiscal Yr TTM* Fiscal Yr TTM* Fiscal Yr TTM*
Price-earnings ratio (X) na na 12.9 18.7 12.9 12.2 18.2
Price-to-book-value ratio (X) na na 0.66 0.55 0.54 0.58 1.50
Price-to-sales ratio (X) na na 0.4 0.4 0.2 0.4 1.4
Price-earnings-to-EPS est growth (X) na na 1.6 nmf 1.2 0.9 1.4
Sales 5-yr. historical growth rate (%) na na 12.2 7.6 18.8 9.9 9.6
EPS 5-yr. historical growth rate (%) na na 26.3 10.1 -12.0 -7.6 -0.4
EPS 3-5 yr. estimated growth rate (%) na na -8.5 nmf -0.9 9.5 12.0
Market cap. ($ million) na na 82.1 47.4 148.0 45.8 391.9
52-wk rel. strength vs. S&P (S&P=0) (%) na na 5 56 12 14 8
               
Monthly Observations              
Average no. of passing stocks 4 6 26 33 83 102  
Highest no. of passing stocks 18 20 65 76 181 228  
Lowest no. of passing stocks 0 0 6 6 21 35  
Monthly turnover (%) 34.0 37.9 23.3 33.1 22.6 29.2  
               

The median size of the stocks in all the variations is much smaller than that of exchange-listed stocks, which is not surprising given that all of the stocks are in the bottom 20% based on book value. Smaller-cap stocks tend to have lower price-to-book values, in general. Another interesting note is that the best-performing variation (score of eight or greater using trailing 12-month data) does not have the companies with the highest growth rates in sales and earnings per share. In fact, it has the lowest rate of sales growth of all the variations.

Passing Companies

Table 2 shows the companies passing screens that looked for scores of greater than seven and eight based on full-fiscal-year data. Table 3 lists the companies passing with similar scores but using trailing 12-month data instead. The tables are ranked by score and then by lowest price-to-book ratio.

Table 2 contains 18 passing companies (six of which have a score of eight). Table 3 contains 42 passing companies (eight of which have a score of greater than eight).

Innotrac Corp. (INOC) is one of three companies that appears on both lists. The company has a price-to-book value ratio of 0.35, a full-fiscal-year score of eight and a trailing 12-month score of seven. Innotrac provides order processing, order fulfillment and call center services. This is a small company with a market capitalization of $17 million. The company’s outstanding shares increased from 12.30 million to 12.32 million during the last year. This represents a 16% increase in shares outstanding over the year and violates one of Piotroski’s criteria.

Using full-fiscal-year data, Innotrac meets all other criteria on the nine-point scale. However, when we screened for this article, Innotrac had not yet released its financial results for the fiscal-2009 year ending in December, making its fiscal-year data very stale. When using trailing 12-month data, Innotrac violates another of Piotroski’s nine points: an improving asset turnover ratio. The asset turnover ratio fell from 1.85 to 1.80 over the screening period. Over the last year, INOC shares have outperformed the S&P 500 by 50%.

A little digging into the company’s current condition reveals a notice from NASDAQ that INOC is in violation of the exchange’s minimum market value rules. The company has until July 6, 2010, to show a market value of publicly held shares exceeding $5 million for 10 consecutive business days. Currently, about 19% of Innotrac’s common stock is included in the publicly held share category as defined by NASDAQ. This is another good example of the importance of thorough research before investing real money into any security.

Company (Exch: Ticker) Price
($)
Score Price
to
Book
(X)
Fiscal Year 52-Wk
Price
Change
(%)
 
Ret
on
Assets
(%)
Current
Ratio
(X)
Gross
Margin
(%)
Asset
Turn-
over
(X)
 
 
 
Description
Innotrac Corp. (M: INOC) 1.38 8 0.35 4.5 1.2 41.2 1.8 120 order processing servs
CIBER, Inc. (N: CBR) 3.73 8 0.52 3.6 2.2 27.2 1.4 43 IT servs consult
Overseas Shiphld (N: OSG) 44.49 8 0.65 7.9 3.5 47.0 0.4 66 bulk shipping
Cornerstone Thera (M: CRTX) 5.05 8 0.66 21.0 1.1 88.8 1.5 38 pharmaceuticals
Friedman Industries (A: FRD) 5.50 8 0.67 21.5 12.6 12.8 3.3 29 steel processing
Core Molding Tech (A: CMT) 2.93 8 0.70 8.3 1.6 18.3 1.7 67 reinforced plastics
EDCI Holdings, Inc. (M: EDCI) 2.86 7 0.27 -8.9 2.5 20.1 1.0 -30 entertainment distrib
Zanett, Inc. (M: ZANE) 0.28 7 0.30 2.3 0.7 31.0 1.6 -13 IT solutions
TBS International plc (M: TBSI) 5.95 7 0.33 24.0 2.0 52.7 0.8 -12 ocean transport servs
K-V Pharmaceuticals (N: KV.A) 3.16 7 0.34 11.2 1.3 69.0 0.8 365 pharmaceuticals
Tecumseh Prods (M: TECUA) 12.61 7 0.47 -5.1 1.7 10.4 1.0 149 heat & cool compress
Envoy Capital Group (M: ECGI) 0.95 7 0.48 -35.8 10.8 -2.5 0.4 -32 retail branding co
SigmaTron Int’l (M: SGMA) 6.10 7 0.51 2.1 3.7 11.9 1.4 267 circuit boards
Analysts Int’l (M: ANLY) 0.40 7 0.56 -14.5 2.0 17.7 4.1 14 IT servs
Goldfield Corp., The (A: GV) 0.38 7 0.62 -18.5 3.0 14.6 1.1 19 electrical construction
Frozen Food Exp (M: FFEX) 3.50 7 0.65 0.4 2.1 46.8 2.9 3 goods transport
Pantry, Inc.(M: PTRY) 13.10 7 0.66 2.7 1.6 14.1 3.0 -16 convenience stores
Star Buffet, Inc. (M: STRZ) 3.01 7 0.66 2.3 0.3 28.6 2.5 86 restaurant franchise
                   
Company (Exch: Ticker) Price
($)
Score Price
to
Book
(X)
Trailing 12-Month 52-Wk
Price
Change
(%)
 
Ret
on
Assets
(%)
Current
Ratio
(X)
Gross
Margin
(%)
Asset
Turn-
over
(X)
 
 
 
Description
K-V Pharmaceutical (N: KV.A) 3.16 8 0.34 11.1 5.4 69.8 0.7 365 pharmaceuticals
SureWest Commun (M: SURW) 8.60 8 0.45 0.2 0.9 44.5 0.4 -17 telecommunications
Continental Materials (A: CUO) 15.05 8 0.46 0.2 2.8 18.9 1.4 -9 heating & cooling
Leading Brands (M: LBIXD) 1.76 8 0.51 0.5 1.4 39.4 1.1 221 beverage bott & distrib
AeroCentury Corp. (A: ACY) 14.87 8 0.59 2.7 nmf 88.8 0.3 69 aircraft leasing
Cagle’s, Inc. (A: CGL.A) 4.85 8 0.65 1.3 1.5 6.3 3.4 169 poultry prods
Star Buffet (M: STRZ) 3.01 8 0.66 0.3 0.4 28.5 2.1 86 restaurant franchise
Amer Shared Hosp (A: AMS) 2.85 8 0.68 0.3 1.7 40.2 0.3 146 medical radiation servs
Intervest Bancsh (M: IBCA) 3.68 7 0.14 0.1 nmf nmf 0.1 89 financial holding co
General Finance (M: GFN) 1.18 7 0.20 0.3 0.8 60.0 0.4 -8 modular space & storage
FreeSeas Inc. (M: FREE) 1.16 7 0.23 4.3 0.6 70.1 0.2 43 dry bulk shipping
SunLink Health Sys (A: SSY) 1.64 7 0.32 1.7 1.6 84.0 1.9 118 healthcare servs
Blonder Tongue Labs (A: BDR) 1.05 7 0.33 2.3 5.3 37.6 1.2 7 cable TV equip
Innotrac Corp. (M: INOC) 1.38 7 0.35 6.5 2.4 45.5 1.8 120 order processing servs
Pro-Dex, Inc. (M: PDEX) 0.47 7 0.40 -11.9 3.2 32.4 1.3 21 medical device systems
Stephan Co. (A: SPCO) 2.30 7 0.41 3.5 6.3 45.4 0.7 27 personal care prods
Broadway Financial (M: BYFC) 5.95 7 0.42 0.2 nmf nmf 0.1 20 savings & loan hold co
Hastings Entertain (M: HAST) 4.37 7 0.42 0.8 1.6 35.9 2.0 134 entertainment retailer
Paragon Shipping (M: PRGN) 4.50 7 0.46 8.1 2.2 87.0 0.2 28 shipping transport servs
Community Fin’l (M: CFFC) 3.90 7 0.47 0.3 nmf nmf 0.1 30 savings & loan hold co
National Dentex (M: NADX) 8.31 7 0.49 0.1 1.4 41.6 1.0 177 dental prosthetics
Lithia Motors, Inc. (N: LAD) 6.38 7 0.51 0.6 1.3 19.1 1.6 135 auto franchises
Premier Financial (M: PFBI) 7.40 7 0.51 1.0 nmf nmf 0.1 29 multi-bank holding co
Duckwall-ALCO (M: DUCK) 14.50 7 0.53 0.4 3.1 32.2 2.3 68 regional retailer
MFRI, Inc. (M: MFRI) 6.40 7 0.56 5.6 2.3 23.2 1.5 25 pipe & filtration sys
CSS Industries (N: CSS) 16.88 7 0.59 3.1 2.3 25.7 1.2 18 social expression prods
American Railcar (M: ARII) 9.45 7 0.60 1.9 10.8 10.9 0.8 32 hopper & tank railcars
Liberty Bancorp (M: LBCP) 7.43 7 0.60 0.6 nmf nmf 0.1 9 savings & loan hold co
New Frontier Media (M: NOOF) 1.79 7 0.61 6.5 2.7 64.1 0.7 22 transactional TV
Nam Tai Electronics (N: NTE) 4.52 7 0.62 0.4 3.6 9.9 0.9 36 electronics
Res-Care, Inc. (M: RSCR) 9.12 7 0.62 5.5 1.8 9.5 1.7 -25 spec needs human servs
BreitBurn Energy (M: BBEP) 15.23 7 0.63 8.7 1.9 77.1 0.3 146 oil & gas partnership
Echostar Corp. (M: SATS) 20.14 7 0.65 -9.5 3.1 21.8 0.6 23 TV satellite servs
One Liberty Prop (N: OLP) 9.84 7 0.65 2.2 nmf 99.3 0.1 247 real estate invest trust
Carriage Services (N: CSV) 4.04 7 0.66 0.6 1.7 25.2 0.3 169 funeral homes
CommerceFirst Banc (M: CMFB) 7.44 7 0.66 0.1 nmf nmf 0.1 64 bank holding co
PNM Resources (N: PNM) 12.22 7 0.66 1.4 1.0 39.2 0.3 72 energy holding co
Navios Maritime (N: NM) 6.01 7 0.67 2.0 2.0 29.3 0.3 167 dry bulk shipping
Boise Inc. (N: BZ) 4.75 7 0.68 4.2 2.6 17.1 1.0 1800 pkging prods & papers
Geokinetics Inc. (A: GOK) 8.47 7 0.69 1.6 1.1 98.3 1.1 214 seismic data servs
AerCap Holdings (N: AER) 9.51 7 0.69 2.1 nmf 65.1 0.2 166 aviation co
NRG Energy, Inc. (N: NRG) 21.84 7 0.70 3.6 1.7 40.5 0.4 11 energy co
                   

Conclusion

While it is easy to be taken in by huge performance numbers, it is important to always look beyond the surface to discover the drivers behind the numbers. AAII’s Piotroski screen offers good performance, but also highlights very few stocks and is a high-risk strategy. As a result, this strategy does not translate to the real world of investing. By tweaking the criteria a bit, we found that though the performance was weakened significantly, more stocks were identified and the strategy’s risk was lowered.

It is important to remember that the passing companies for each screen do not represent a list of recommended stocks. As with all types of investing, it is important to perform due diligence to verify the stock’s financial strength and earning potential. It is also essential to decide if the stocks match your investing style and risk tolerance before committing your investment dollars.

What it Takes: Applying the Piotroski Philosopy

  • The price-to-book ratio ranks in the lowest 20% of the entire Stock Investor database
  • The stock does not trade on the over-the-counter exchange

One point is awarded for meeting each of the following criteria:

  • The return on assets for last year (Y1) is positive
  • Cash from operations for last year (Y1) is positive
  • The return-on-assets ratio for last year (Y1) is greater than the return-on-assets ratio for one year ago(Y2)
  • Cash from operations for last year (Y1) is greater than income after taxes for last year (Y1)
  • The long-term debt-to-assets ratio for last year (Y1) is less than the long-term debt-to-assets ratio for one year ago (Y2)
  • The current ratio for last year (Y1) is greater than the current ratio for one year ago (Y2)
  • The average shares outstanding for last year (Y1) is less than or equal to the average number of shares outstanding for one year ago (Y2)
  • The gross margin for last year (Y1) is greater than the gross margin for one year ago (Y2)
  • The asset turnover for last year (Y1) is greater than the asset turnover for one year ago (Y2)

For this article, we tested six versions of the screen. First, using full-fiscal-year data a company must have a score of at least seven, at least eight or a perfect nine. Second, using trailing 12-month data, a company must have a score of at least seven, at least eight or a perfect nine.

Cara Scatizzi is a former associate financial analyst at AAII.


Discussion

Tom Brackett from NC posted over 4 years ago:

Has anyone edited the Stock Investor Pro Screen to reflect Cara Scatizzi's proposed adjustments (score of 8, using TTM) ?

Tom


Hovhannes from CA posted over 4 years ago:

Why are these screens not reflected in SIPRO?
One would think that all the stocks should be rated with their respective Piotroski scores. Or, at least include the score of 8 screen as is presented on the website.


Jeff from CO posted over 3 years ago:

I understand that it is normally important to do due dilligence, but do you really think that it is important to do your homework when following a stock screening strategy such as Piotroski high F-score? I am using this method right now and am not willing to investigate 8 or 10 stocks every month (I understand that many of them stay the same month after month), but rather I am relying on the performance of the screen. The screen's results have been obtained without any extra investigation into the stocks, and I think the strategy is sound enough and I understand that there will be some horrible losers in the bunch, but they will be in the minority.

The fact is, if a person had invested in every single stock that passes the screen each month from the beginning, that person would be very rich right now. What does anyone else think?


Anthony from NY posted over 3 years ago:

I envy Jeff for having the time to do the work and trade his stocks along the Piotroski model. I, however, would like to find a mutual fund, ETF, whatevr, that purports to use the screen blindly, and invest with that fund. Although the author's comment that Piotroski is not an efficient investment strategy because of its high risk, I think a fund/ETF that uses it with just 7 of the 9 factors would make a good investment for a small portion of one's portfolio. Anyone out there listening? Fidelity? Vanguard? Goldman Sachs? Anyone?


Mark from CA posted over 3 years ago:

Anthony, the reason mutual fund companies won't do a Piotroski fund is probably because the float on many of the stocks chosen is too small for them to buy a significant number of shares. A multi-million dollar fund would have to buy up all of some companies' shares to really do a Piotroski.


Jean from IL posted over 3 years ago:

Thomas & Hovhannes: There is a Piotroski High F Score screen programmed into SI Pro. It is set up to filter for an F score of 8 or higher, based on fiscal-year data. However, you can edit the screen to use an F score based on trailing 12-month data.


Dean from NC posted over 3 years ago:

I see from the historical chart (at www.aaii.com/stock-screens/screendata/Piotroski; tab Chart) that P-9 can be a highly cyclical screen. For example, from mid-2007 (when the broad market neared a peak) to early 2009 when the market hit bottom, P-9 went from +1500% of 1998 to +500% of 1998, a decline of more than 60%. Is it the case that the P-9 screen passed relatively few stocks in mid to late 2007 (compared to the 2003 to 2006 period)? And if so, could the screen's volatility be reduced (and average returns improved) by moving from P-9 to cash (say) when very few stocks pass the screen? That is, is the number of stocks that pass the screen itself a market indicator?


SS108 from IL posted over 3 years ago:

Hello All,

A quick and very basic question- I take it that we only stay invested in a particular holding as long as it shows up in the screen? So a minimum of at least 1 month as we check the screen once a month at the end of the month? Is that right?

Thank you.


Charles from IL posted over 3 years ago:

Shambaag - There are two schools of thought regarding the screens. The first is that you buy whatever passes the screen and hold onto the stock until it no longer passes. The problem with this approach is that screens are simply database filters and do not consider anything outside of the criteria. This is why I belong to the second school of thought, which is that screens are merely starting points and additional research is required. If a good company passes a screen and meets your requirements, buy it and hold onto it until you have a clear reason for selling it (e.g., a negative change in business conditions, excessive valuation, etc.). -Charles Rotblut


Nathan Spear from OR posted about 1 year ago:

I'm a new subscriber to AAII.com and find this topic fascinating and hard to follow. Would someone that follows the Piotroski (or simply understands it) care to explain it to me? An aspect that is confusing me is the AAII.com site shows 4 stocks meeting the criteria currently, however at grahaminvestor.com there is a list of hundreds of stocks. Perhaps one of the screens is broken, perhaps they are different Piotroski screens. That is the first confusion. The second is the strategy rules for investing. Are the stocks invested in the ones appearing on the screen on the first day, or the last day of the month?

I'd be grateful for an explanation of how to invest in the screen. What are the rules of investment.

I'd appreciate the answer sent to my email, ns@nathanspear.com, since I don't think I'll be notified of an update to this post.

Thank you for your time and knowledge.


Ralph from Georgia posted about 1 year ago:

Hey Nathan,

Not sure if you got a response to your question.

I'm glad you asked this. I had a similar question and here is my take on it.

The AAII screens show stocks that pass on a monthly basis.

The Graham Investor screen shows stocks that have historically passed.

So, how do you proceed?

Well, the value of the GI screen list is that it shows that short-term speculation is not what the Piotroski (or any Value Investing strategy) is about.

I went through some businesses that qualified some years back (GI screen) and see how great of an increase these stocks achieved over time.

A couple examples:

PHI -
passed Q1/2001
price 4/01 - $13.30
current - $70.13
High 12/07 - $75.72

Comment: Short-term investors would have lost out since the stock fell continuously until finally going up to $13.80 in Dec 2003.

FMX
passed Q4/2009
price 1/10 - $49.77
current - $100.23
High 4/13 - $124.96

Comment: Short-term investors would have lost out since the stock didn't go up past the starting point for 8 months when it finally hit $51.38 in Aug 2010.


Now, with all that said, we have probably missed the boat on those stocks, but you can see the long term gains (with short term consequences).

So, AAII's list provides stocks that show a current opportunity. The things is to invest in these in a cumulative fashion and not jump from stock to stock that pops up on the screen.

Again, Piotroski's strategy was focused on finding undervalued stocks that had potential for turnaround based on recent financial data.

The thing is, it takes time to see the results sometimes.

All in all, if you are looking for long-term investments and can deal with the emotion of short-term declines, this is for you.

Now, obviously there could be some tweaks to help time the investment better so that one doesn't have to endure a long time at a loss. Perhaps certain indicators will be noticed to help with that.

Until then, we'll just have to endure...

All the best.



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