Stocks featured in this article: CNH Global (CNH), ArcelorMittal (MT), Nucor Corp. (NUE), Timken Co. (TKR), and Valero Energy Corp. (VLO).
This week's screen has something for both Growth Investors and Value Investors.
Growth Investors focus on companies with great earnings growth, but that alone isn't good enough for many stock pickers any more. With P/Es on the decline, even growth investors are demanding earnings at reasonable prices (i.e., low P/Es).
And while Value Investors focus on low P/E stocks, too many are low because they lack earnings power. With tons of stocks suddenly trading in 'value' type ranges, it's their growth stories that will set them apart.
Nowadays, one without the other just doesn't cut it.
So instead, try combining the best of both worlds and focus on the companies with the highest growth rates and the lowest P/E ratios.
The screen I'm running this week is as follows:
- Companies with 5 Yr. Historical Growth Rates in the top 20 percentile of all companies.
(Using a Uniform Rank of 1-99 (99 being the best growth rates), I screened for stocks ranked 80 or better.)
- Companies that also have the lowest P/Es – lower than 80% of all other companies.
(Using a Uniform Rank of 1-99 again (this time 99 having the lowest P/Es), I screened for stocks ranked 80 or better.)
- I then required those stocks to be trading at or above $5, with average daily trading volumes of 100,000 shares or more.
- And a Zacks #3 Rank or less.
(No 'Sells' or 'Strong Sells' allowed.)
Here are 5 stocks from this week’s list (12/2/08):
CNH CNH Global
MT ArcelorMittal
NUE Nucor Corp.
TKR Timken Co.
VLO Valero Energy Corp.
This screen is an excellent way to find good growth companies that also have low valuations.
Check it out for yourself and get the rest of the stocks on this list. See where your stocks Rank out of all the other stocks out there, and test your own strategies to see how they've done. Find out what works and what doesn't. It can all be done with the Research Wizard stock picking and backtesting program.
Click Here for your free trial to the Research Wizard
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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