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The year 2024 continued the strong run for the S&P 500 index, posting gains of more than 20% in back-to-back years. However, the performance of market-capitalization-weighted indexes did hide some underlying weakness in the U.S. stock market. Seventy-one percent of the S&P 500 companies underperformed the index in 2024 on a price-change basis, and only 34% ended the year with a gain. Excluding over-the-counter stocks, 45% of exchange-listed stocks were up on a price-change basis in 2024.
Last year was dominated by mega-cap stocks, artificial intelligence (AI), cryptocurrency and politics—a little bit of something for everyone. This is much like the AAII Stock Screens. With over 50 rules-based strategies to choose from, we track a number of investing styles and factors to fit almost everyone’s time horizon or risk profile.
As an AAII member and A+ Investor subscriber, you can access these stock screens with daily updates of the companies passing each of these screens. To find the complete list of all the stock screens AAII developed and tracks, select AAII Stock Screens from the Stocks drop-down menu on AAII.com.
The link will take you to the All Screens view, with a table listing the 50+ stock screening strategies AAII tracks:
For 2024, the top-performing AAII stock screen was the Rule #1 Investing strategy, which posted a simulated return of 63.2%. Out of the 55 AAII screens, 39 (71%) posted positive price-return gains over the entire year. Seventeen screens also outperformed the S&P 500’s price gain of 23.3%.
The theoretical portfolios used to generate these performance figures are rebalanced monthly, with the performance for a given month calculated as the average return of the stocks that passed the screen at the end of the prior month.
It is worth pointing out that the performance figures are not based on real-money investments and omit transaction costs (commissions, bid-ask spreads, etc.) and dividend reinvestments. Also note that performance is updated monthly, while the passing company lists are updated at the end of each trading day.
The Rule #1 Investing approach, popularized by Phil Town, is a value investing strategy based on Warren Buffett’s principles. It emphasizes buying high-quality companies at a significant discount to their intrinsic value to maximize long-term returns while minimizing risk. The strategy follows five key steps:
The Rule #1 Investing approach prioritizes patience, discipline and thorough research, aiming to compound wealth over time while protecting against losses.
From the online table in Figure 2, you can also sort all the stock screens based on long-term performance. In doing so, we see that the O’Shaughnessy Tiny Titans screen has been the top-performing AAII strategy over the last three years, with a simulated annualized price gain of 29.2%. The screen is also at the top for five, 10- and 15-year performance.
In addition, the Factors column of the table indicates the underlying characteristics of the various screens. For example, the Rule #1 Investing strategy uses value (V), growth (G) and quality (Q) factors.
Click the strategy name from the AAII Stock Screens table to learn more about the screen:
Here we see a graphical representation of the Rule #1 Investing screen’s performance since its inception in 1998, as well as the average number of companies passing the screen each month (one) and the average monthly turnover (24.5%).
Scrolling down, we see the list of companies currently passing the screen as of the previous trading day’s close. Here are the 12 companies that met the criteria of the Rule #1 Investing screen as of January 28, 2025:
We will return to this list shortly.
We also provide an in-depth article describing the strategy and the rationale for the criteria each of the AAII Stock Screens uses. Since these are not “black box” screening systems, we also provide the exact screening criteria used to arrive at the passing company listings.
Town advocates investing in “wonderful companies” that have meaning to you and that you should be willing to rely on as your sole means of financial support for the next 100 years. Look for companies with financial strength, stability and quality management whose share price is at least half of their intrinsic value. Buying below intrinsic value provides a “margin of safety” that protects investors from incorrect analysis as well as unfavorable company developments, with subsequently less risk of a market overreaction on the downside. Town believes that, by following the Rule #1 Investing approach, you can secure at least a 15% annual rate of return with a minimum level of risk.
Here are the filters used by the Rule #1 Investing screen:
The companies passing the Rule #1 Investing screen are ranked in descending order by their average return on invested capital over the past five years. Doximity Inc. (DOCS) ranks highest among all the passing companies as of January 28, 2025. Clicking on its ticker takes you to its Stock Evaluator page, which includes data and analysis that is exclusive to A+ Investor subscribers.
Among these is commentary and analysis comparing companies using AAII analytics and all (if any) of the AAII Stock Screens the company is currently passing.
As of January 28, Doximity was passing two additional AAII screens: the Dual Cash Flow screen and the Value on the Move PEG With Historical Growth screen.
The Stock Evaluator page is designed to provide the data and information an investor needs to make an educated, unbiased decision as to whether to buy, hold or sell an individual stock.
One of the most popular sections of the Stock Evaluator is the Grades tab, which is an exclusive benefit of A+ Investor. The A+ Stock Grades system is a stock-grading tool based on the percentile rankings of multiple key metrics within five quantitative 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 five investment factors that have been shown to produce market-beating results.
The Grades tab of the Stock Evaluator provides a deeper dive into the underlying variables used for the various Stock Grades.
You get a letter grade for each of the five investment factors, and you can also see the percentile rankings of the underlying data points for each grade. In addition, we show the firm’s main competitors and their letter grades. These grades are calculated and updated daily.
Here we see the A+ Stock Grades for Doximity as of January 28:
A+ Investor subscribers can take a deeper dive into the remaining tabs, including the Grades, Charts, News & Events, Valuation, Growth, Ratios, Analysts (analyst ratings), Earnings (consensus estimate data), Financials (detailed quarterly and annual financial statement data), Insiders (insider buy and sell activity) and Filings [reports filed with the U.S. Securities and Exchange Commission (SEC)] sections.
At the Screening area of AAII.com you will also find aggregate stock grades for all the AAII Stock Screens.
On the All Stock Screens table presented earlier, there is a Grades tab. 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 A+ Investor subscribers.
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 Global Industry Classification Standard (GICS). Here are the A+ Grades for the 12 companies that passed the Rule #1 Investing screen as of January 28:
By providing the average A+ Stock Grades for all of the stock screens, you get a clearer picture of the types of stocks that pass each screen. This, in turn, will help you decide whether a given strategy fits your own investing philosophy. If you gravitate more toward value stocks, you may not be interested in stock screens where the average A+ Value Grades are consistently A’s or B’s. Likewise, growth investors may want to look past those screens with high average A+ Growth Grades.
The power of disciplined, rules-based investing is evident in the strong performance of AAII’s stock screens, particularly the Rule #1 Investing strategy. By focusing on high-quality companies, financial strength and value-driven opportunities, this approach can serve as a foundation for long-term wealth building.
AAII’s A+ Investor provides the tools, data and analysis you need to make informed investment decisions—whether you’re a seasoned investor or just getting started. With daily updates, in-depth stock evaluations and a comprehensive grading system, you better understand market opportunities and risks.
Now is the time to elevate your investing strategy. Explore the complete list of AAII Stock Screens, analyze top-performing stocks and confidently refine your portfolio. Visit AAII.com today and take the next step toward more thoughtful, data-driven investing.
