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First Cut Stocks Investing Gurus

Consensus Stocks: Passing the Most Screens

The 22 stocks passing four or more AAII Stock Ideas strategies.

by John Bajkowski | July 2018

The First Cut this issue lists the stocks that passed the greatest number of screens tracked by AAII on the Stock Ideas section of AAII.com.

This process is accomplished by examining the results of every screen and identifying stocks passing more than one strategy

As of June 15, 2018, 855 stocks passed at least one of the screens tracked by AAII, but only 22 stocks passed four or more screens and they are the stocks that made the First Cut this month. Note that some screens did not have any companies that passed at the time of the analysis.

The stocks in the table are first ranked by the number of screens passed and then by their 52-week relative price strength rank. The percentile rank shows how a particular company’s price gain compares to all domestically traded companies. With price momentum, a higher relative strength percentage rank is usually desired.

The table lists the price-earnings ratio (price divided by trailing earnings per share) as a basic valuation measure.

The annual earnings growth rate provides a simple historical indication of the bottom-line company performance over the last three years.

The market cap (number of shares outstanding times the share price) is a common way to measure the size of a firm.

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.

Further information on each of the screening strategies can be found at the Stock Ideas area of AAII.com.

—John Bajkowski, AAII president

Consensus Stocks: Passing the Most Screens

Consensus Stocks: Passing the Most Screens
 


Discussion

Doug from NY posted over 8 years ago:

I'd beware combining screens, without a great deal of thought about how the criteria interact. For instance, if you had one strategy that prefers large companies, and other that picks out small companies, then the conjunction will NECESSARILY select medium-size companies. But that might be where both of the original screens worked least-well! Another way I like to think about it: Suppose you had criteria for judging a dog-show, and criteria for a cat-show. Combining those two sets is NOT going to give you the best cats OR dogs, but instead vaguely cat-like dogs, or dog-like cats :-)


Ken from WI posted over 8 years ago:

Doug makes a good point. Presumably, though, these are the best of the dog-cat mix, which might be useful by itself even if it doesn't select the very best stocks out there. (indeed i think cats could be improved as a breed if they were a bit more like dogs). What seems strange, though, is that several stocks with strong negative 3-year EPS growth rates could have passed so many screenings.


Dennis Ahr from MD posted over 8 years ago:

I have done backtesting to 2005 analyzing which screen combos have resulted in the most winners. The best example is a stock that passed both the Dreman (EPS est) and Free Cash Flow screens. Using my buy-sell criteria, that stock had an average gain of 5.56% and was held an average of 233 days. The total number of occurrences was 60 as of June, 2018 - 44 gainers and 16 losers.


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