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In these volatile markets, we wanted to make sure our valued members get access to the best information possible to help you navigate the uncertainty. This is why you may have noticed the recent enhancements to our Stock Ideas Update email.

Each week, we are sending you education and stock ideas that are relevant to today’s market. Markets like these expose bargains, so we want to highlight a few ideas that can help you replenish your portfolio through sound strategies with good long-term performance.

If you find this information valuable and want an edge throughout this market volatility, you can access robust stock screens and evaluations through A+ Investor, a suite of rigorous investment tools that includes diversification analysis, stock evaluators and more than 50 stock screens updated every day.

This week, we look at the most popular screening strategies followed by AAII members. These are strategies that have been marked the most as “favorite” screens in A+ Investor at AAII.com, and they give an insight into the screening strategies that real investors are following right now.

Favorite A+ Investor Screening Strategies

Of the more than 60 stock screening strategies that AAII tracks, there are some that are more popular than others. We reveal some of the favorite screening strategies followed by members using AAII’s A+ Investor and a few of the top passing companies based on these strategies.

AAII’s A+ Investor is a new suite of tools that helps investors to monitor their investments, discover new opportunities and learn which strategies work (or don’t work). Taking all the screening strategies that members have tagged to follow, A+ Investor looks at the strategies with at least one passing company, tallies how often each screen has been favorited, then ranks those strategies by popularity.

All of the screening strategies that AAII tracks have been developed and backtested using Stock Investor Pro, AAII’s fundamental stock screening and research database program. Many investors choose to follow screens based on specific guru and/or factor strategies. The most widely followed strategies offer a portrait of A+ Investor members.

The first table below summarizes the performance of the favorite guru and factor screening strategies that AAII tracks. Some of the strategies are based on the investment philosophies of such investing “gurus” as Warren Buffett, William O’Neil, James O’Shaughnessy and David Dreman. The screening strategies are also categorized based on the “factors” that underly each strategy. A key at the bottom of the table explains the factor initials, such as value (V), growth (G) and momentum (M).

Today’s Favorite A+ Investor Screening Strategies

Strategy Favorites (Ranked by Most Popular Strategy for A+ Investors With at Least One Passing Company)

The two most popular screening strategies are Stock Market Winners and O’Neil’s CAN SLIM Revised 3rd Edition. The Stock Market Winners strategy was developed by Marc Reinganum and stems from a publication by William O’Neil & Co. titled “The Greatest Stock Market Winners: 1970–1983.” The Stock Market Winners approach is down 27.6% through April 30, 2020, but has an average annual price gain of 18.3% a year over the last 10 years.

All of the strategy favorites are down for the year through April 30. However, they all have strong five- and 10-year average annual performance track records, except for the Murphy Technology screen. This screening strategy looks for technology and telecommunications companies that have been growing sales by at least 15% a year over the last three years, as well as net margins and returns on equity (ROE) of at least 15%. The Murphy Technology approach has a one-year average annual return of 38.6% but is down 11.3% for the year ending April 30.

Top Passing Companies From Strategy Favorites

The second table shows 18 of the top passing companies based on the most popular screening strategies among A+ Investor members. The list includes two stocks from each strategy except for the Stock Market Winners and O’Neil’s CAN SLIM Revised 3rd Edition approaches, which only have one passing company each as of May 11, 2020. Most of the other strategies have several companies that pass the approach’s screening filters.

The Buffett Hagstrom, Buffettology Sustainable Growth and Estimate Revisions Top 30 Up approaches each have at least 30 passing companies as of May 11. The companies in table below were selected from the group of passing companies based on the highest A+ Stock Grades for a specific strategy’s most relevant investment factors.

Top Passing Companies (Ranked by A+ Investor Strategy Favorites)

Combining investment factors of value, growth and quality, the Buffett Hagstrom screen looks for stocks with, among other characteristics, a consistent operation history as measured by operating profits and return on equity (ROE) greater than 15% for the current period. The strategy also seeks stocks with operating margin and net profit margins greater than the respective industry median to reflect Buffett’s preference for companies that have defensible market share.

Two of the companies passing the Buffett Hagstrom screen are CBRE Group Inc. (CBRE), a real estate leasing, property and project management services company and Essent Group Ltd. (ESNT), a private mortgage insurance company, both of which have A+ Stock Grades of A’s and B’s for the value and growth investment factors.

PennyMac Financial Services Inc. (PFSI)—a U.S.-based financial services company—passed the Dreman With Estimate Revisions screen, which utilizes a contrarian approach to seek stocks with upward earnings estimate revisions. Of the passing companies in table above, PennyMac Financial Services has the most investment factors with A+ Stock Grades of A’s or B’s. It has A’s for value and earnings revisions and B’s for momentum, quality and growth.

The earnings revisions grade takes into consideration the magnitude of a company’s latest two earnings surprises as well as the percentage change in the current year’s consensus estimate over both the last month and last three months.

In addition to PennyMac Financial Services, there are four more top passing companies from members’ favorite screening strategies with at least four investment factor grades of A or B from A+ Stock Grades.

Two of the companies, Quidel Corp. (QDEL), a diagnostic testing solutions company, and NeoPhotonics Corp. (NPTN), a communications technology company, both pass the Estimate Revisions Up 5% and Estimate Revisions Top 30 Up screens. The other two are Gain Capital Holdings Inc. (GCAP), which passes the O’Shaughnessy Tiny Titans screen, and Adobe Inc. (ADBE), a software and services company, which passes the Buffettology EPS Growth screen.

By keeping an eye on the screening strategies that AAII’s A+ Investors are following, you have one more piece of the investment puzzle that may help aid your investment search.

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