In this issue, Derek Hageman offers the annual recap of the AAII Stock Screens. For this installment of the AAII How-To series, we combine the stock screens with a popular feature of AAII.com: the A+ Stock Grades.

The A+ Stock Grades system is a grading tool based on percentile rankings of multiple key metrics within five investment factors: value, growth, momentum, earnings estimate revisions and quality. They represent a summary of a company’s fundamentals and give you a quick overview of how a stock rates based on the five investment factors that have been shown to produce market-beating results.

At the Screening area of AAII.com, you can see the calculation of aggregate stock grades for all of the AAII Stock Screens. To access the complete list of all the stock screens that AAII has developed and tracks, select “Explore All Screens” from the Screening drop-down menu on AAII.com (Figure 1). The link will take you to the All Screens view, with a table listing the 60+ stock screening strategies AAII tracks (Figure 2).

By default, the All Screens list displays the Performance tab with performance stats over various periods for all the stock screens AAII tracks. You can sort the table by any of the performance columns. In addition, the Factors columns indicate the underlying characteristics of the various screens.

For example, the InvestWare Quality Growth screen, which was up 100.3% for 2020 through the end of November, uses filters identified with growth (G) investing. The screen imposes minimum levels of historical sales and earnings per share growth over the last one-, three- and five-year periods, as well as minimum forecasted annualized earnings growth over the next three to five years.

The All Screens table also has a Grades tab (Figure 3). This table shows the average grades for each AAII stock screen based on the companies that currently meet the screen’s criteria. The passing companies and average screen grades are updated daily through the previous trading day’s close for subscribers of  A+ Investor and Stock Investor Pro.

Clicking on the down arrow to the right of each screen name will show you the companies currently passing the screen, their individual A+ Stock Grades and their sector, as defined by The Refinitiv Business Classification (TRBC). For example, as of the close on December 10, 2020, five stocks passed the David Dreman screen (Figure 4).

Based on the A+ Stock Grades for these five companies, the Dreman screen grades are:

• Value: B
• Growth: B
• Momentum: C
• EPS Revisions: B
• Quality: B

By looking at the average A+ Stock Grades for all of the stock screens, you get a clear picture of the types of stocks that pass each screen. This, in turn, will help you decide whether a given strategy fits your own investment philosophy. If you gravitate more toward value stocks, you may not be interested in stock screens where the average A+ Value Grades are consistently D’s or F’s. Likewise, growth investors may want to look past those screens with low average A+ Growth Grades. ?

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