Many investors use stock screeners to identify stocks that meet their particular investing requirements. If you’re a regular reader, you know that I frequently use the Finviz stock screener to describe how to find stocks worth considering.
Now there’s news on that front. Finviz uses “filters” to search for stocks meeting user’s selection criteria. Finviz recently updated its stock screener deleting some existing filters and replacing them with new filters.
Now, for the first time, Finviz supports filters designed to enable momentum plays. Specifically, filters to find stocks moving up due to recent positive news. Today, I’ll describe a stock screen that takes advantage of those new filters.
Start from the Finviz homepage (finviz.com) by selecting Screener. Select “All” on the Filters bar to see the available screening filters.
Recent positive surprises
Earnings and/or revenues that exceeded analyst consensus forecasts are termed positive surprises. They’re termed negative surprises if the numbers fell short of expectations. Positive surprises typically drive share prices higher on announce date, and often for several weeks later. So, using the new “Earnings & Revenue Surprise” filter, specify “Both Positive” to pinpoint stocks with the strongest appreciation potential.
Trading near all-time highs
By definition, momentum stocks should be trading near all-time highs. Thus, using the new “All-Time High/Low” filter, specify “0-3% Below High” to limit your list to those stocks.
Next, we’ll use traditional fundamental factors to pinpoint stocks with the best long-term outlooks.
Avoid overpriced stocks
The Price/Earnings ratio (P/E) is the most widely used valuation measure. Specify “Under 20” for “Forward P/E” to assure that your picks are not overpriced based on expected earnings for fiscal year 2024.
Profitable and low debt
Already profitable companies carrying low debt have the best long-term growth prospects.
Return on Equity, which compares net income to shareholders equity, is a reliable profitability gauge. So, using the “Return on Equity” filter, specify “Positive” to limit your list to profitable stocks.
The “Debt/Equity filter compares a firm’s total debt to shareholders equity. Using the Debt/Equity filter, specify “Under 0.9” to limit your list to stocks not currently overloaded with excessive debt.
Earnings growth forecasts
Share prices tend to track annual per-share earnings (EPS). So, specify “Over 10%” for “EPS Growth Next Year” to limit your list to stocks with strong earnings growth expectations.
High institutional ownership
Institutional investors such as mutual funds and hedge funds typically have access to information that we never see. So, using the “Institutional Ownership” filter, specify “Over 50%” to limit your list to stocks that these wired-in investors hold.
Six candidates
My screen turned up six stocks when I ran it on Wednesday.
• Fiserv (ticker: FI): Financial management services. Expected 2024 EPS growth: 14%.
• Lerner (LEN): Homebuilder. Expected EPS growth: 11%.
• Molina Healthcare (MOH): Managed care programs. Expected EPS growth: 11%.
• Skechers (SKX): Designs and sells footwear, Expected EPS growth: 16%.
• Westinghouse Air Brake Technologies (WAB): Builds locomotives and other RR products. Expected EPS growth: 11%.
These are my ideas, but do your due diligence. The more you know about your stocks, the better your results.
Harry Domash of Aptos publishes the Winning Investing and the Dividend Detective websites. Contact him at www.winninginvesting.com or Santa Cruz Sentinel, 318 Encinal St., Santa Cruz, CA 95060. To see previous Domash columns, visit santacruzsentinel.com/topic/Harry_Domash.
