Revisiting Four Winning Strategies

In mid-April, I wrote about the often daunting process of forming an effective stock screening strategy. In an effort to help investors find winning stocks and provide a sneak peak into some of Zacks’ market-beating strategies, I highlighted four stock-picking screens from the Research Wizard and included a stock that was produced by each screen.

The stocks were Accenture Ltd. (ACN - Snapshot Report), Cimarex Energy Co. (XEC - Snapshot Report), Stone Energy Corp. (SGY - Analyst Report) and Walter Industries, Inc. (WLT). Each company has performed better than all three major averages over the past year and each stock screen continues to generate picks that outperform the market.

Therefore, I thought it would be worth wile to revisit each strategy and check out the stocks that currently meet the criteria of each winning screen. Once again, I plucked one stock from each strategy, detailing them below.

The screening strategies are the Upgrades and Revisions2, Filtered Zacks Rank2, Value Method1 and Momentum Method1.

Upgrades and Revisions 2

The Upgrades and Revisions 2 strategy focuses primarily on stocks with upward Earnings Estimate Revisions and Rating Upgrades. This screen generates approximately 8-10 stocks a month, has an excellent win ratio (74%) and has shown consistently impressive returns year after year.

One company that currently fulfills the requirements of the Upgrades and Revisions 2 screen is Fluor Corporation (FLR - Snapshot Report), which provides services globally in the fields of engineering, procurement, construction, operations, maintenance and project management.

The Zacks #1 Rank (“strong buy”) company posted a record second quarter. Net earnings jumped 119% to $209 million from last year’s $96 million. The company mentioned that all business segments contributed to this positive result by posting solid growth in profit over last year.

The company also hiked its earnings guidance for the year to a range of $3.65 to $3.80 per share. This compares with FLR’s previous guidance of $3.30 to $3.45 per share after adjusting for a two-for-one stock split. Analysts responded with higher forecasts. Eight out of 11 covering analysts raised full-year 2008 earnings estimates from the two months-ago level of $3.29 per share to $3.58. Read our

Filtering Zacks Rank

Investors looking for a reliable way to trade some of the best of the Zacks #1 (Strong Buy) stocks, should try the Filtering Zacks Rank strategy, which will enable an individual to trade fewer stocks for bigger returns. Since there are typically over 200 stocks on the Zacks #1 Rank list (Strong Buy) at any time, this strategy applies two filters. One filter looks for positive current quarter estimate revisions over the last four weeks. The other filter screens for positive average broker rating changes over the last week.

Almost Family, Inc. (AFAM - Snapshot Report) provides home health care services in the U.S., operating segments of visiting nurse and personal care.

Also a Zacks #1 Rank (“strong buy”) company, AFAM announced record results in the second-quarter. Net services revenue increased 50% from last year to $48.7 million. Net income jumped to $3.9 million, up from $2 million in the same period last year. This produced earnings of 50 cents per share, topping analyst estimates of 38 cents per share.

The current-year estimate stands at $1.89 per share, up from $1.51 per share 60 days ago. The most accurate forecast is a more a bullish $1.92. The next-year’s projection of $2.26 per share is up from last month’s $2.23 and the two months-ago estimate of $1.73. The most accurate 2009 expectation is higher at $2.34.

Both of these stock screens are explained in greater detail in the Top 10 Stock Screening Strategies That Make Money report. The report contains proven profitable trading strategies and unique ways to screen for winning stocks. The strategies were created with and backtested in the Research Wizard stock screening and backtesting program.

Individuals can use the Research Wizard to run the aforementioned screens or to test any of the other proven, profitable strategies that come with the program. One can also learn how to create and test his or her own winning trading strategies that signal when to buy and when to sell.

Two more winning strategies from the Research Wizard include Value Method1 and Momentum Method1.

Value Method1

The Value Method1 screen consists of parameters that look for outperformers with rising earnings estimates and attractive valuations.

Olympic Steel, Inc. (ZEUS - Snapshot Report) is another Zacks #1 Rank (“strong buy”) pick. The company distributes processed carbon, coated and stainless flat-rolled sheet, and coil and plate steel products in the United States.

On July 31, Olympic Steel released record second quarter earnings that beat Wall Street estimates by $1.00 per share. Net income was $29.6 million, or $2.70 per share, compared to $9.4 million, or 88 cents per share, a year ago.

For the full year, analyst estimates of $6.87 are above last month’s $6.56. The most accurate projection stands even higher at $7.43.

Momentum Method1

The criteria for Momentum Method1 includes parameters such as a Zacks Rank #1 (Strong Buy) and solid share price momentum.

Knoll, Inc. (KNL - Snapshot Report), a furniture maker, rounds out this list of Zacks #1 Rank (“strong buy”) companies. The company has a good record of meeting or beating analysts' earnings expectations, and has averaged a surprise of 11.2% over the past 4 quarters.

The company's second-quarter report included adjusted earnings per share of 49 cents on net sales of $292.5 million. The earnings result eclipsed the consensus by 22.5% while easily improving upon the previous year's 37 cents. Net sales moved higher by 7.5%. KNL cited its diversification strategy that focused on high design content businesses and away from dependence on North American systems sales as a contributor to the strong results.

Wall Street has full-year 2008 earnings forecasts pegged at $1.69 per share, up from $1.58 over the past 60 trading days.

Additional Resources

Zacks Equity Research - Find out detailed stock information from Zacks analysts. Here you can find the latest research reports on the companies above.

Zacks Free Custom Screener - This totally free Zacks screener contains hundreds of fundamental criteria.

Zacks Research Wizard - This program enables investors to back test screening strategies.

Top 10 Stock Screening Strategies That Make Money - Check out this report and discover stock screens that work in both up markets and down.

The Zacks Rank Guide - Discover the Zacks Rank stock picking system that has proven to be an extremely profitable investment tool.