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Stock Market Winners Screen

Performance

  Stock Market Winners S&P 500
YTD Return: 1.7% 6.7%
Five Year Return: 32.9% 13.3%
Ten Year Return: 14% 5.9%
Inception: 20.3% 4.3%
Data as of 9/30/2014
The Stock Market Winners Screen represents AAII's interpretation of the investment approach and is not determined by the original strategist. The list of passing companies represents a hypothetical portfolio, which is used to track the screen’s performance on a chart.

Passing Companies

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Screening Criteria

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Chart

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It has been ten years since AAII Journal published an article by Marc Reinganum, titled "Investment Characteristics of Stock Market Winners," which examined the common traits of a group of winning stocks. These types of examinations can be noteworthy if they help to establish financial relationships likely to hold true over time.

The study examined 222 stocks highlighted as winners in a publication by William O'Neil & Co. titled "The Greatest Stock Market Winners: 1970-1983." The goal was to establish the characteristics common to these stocks prior to their rise to super stock status. Nine trading rules were developed that helped to identify the winners:

  • Price-to-book-value ratio less than 1.00;
  • Accelerating quarterly earnings;
  • Positive five-year growth rate;
  • Positive pretax profit margin;
  • Relative strength rank of at least 70;
  • Relative strength rank of the stock in the current quarter is greater than the rank in the previous quarter;
  • O'Neil Datagraph rating of at least 70;
  • Stock selling within 15% of its maximum price during the previous two years; and
  • Fewer than 20 million common shares outstanding.

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