Stock Screen: Analyst Darlings

By this time, readers should be well-acquainted with my utter disdain for mainstream chatter and the pundits who peddle it. Yet it is also important not to let inherent biases blind us to opportunities. Even as I despise Wall Street and their endless, self-serving babble, analysts can be useful. This week’s screen is based on my attempt to find some use in this muck.

In the past, I’ve run contrarian screens based on analyst sell signals; this time, I decided to look at strong buys. Most analysts love growth and I love cheap so only PEG ratios under 1.0 were included. To narrow the field, I came back to my tried and true metrics of strong free cash flow and good yields. Here’s the full criteria for the screen:

  • (% Analysts Give Highest Rating >= 80)
  • and (Free Cash Flow / Market Cap % >= 10)
  • and (PEG Ratio <= 1)
  • and (Dividend Yield % > 0)

The screen yielded the following names:

  • Aceto Corporation (ACET.O)
  • American Greetings Corporation (AM)
  • Ducommun Incorporated (DCO)
  • Ennis, Inc. (EBF)
  • Jinpan International Limited (JST.O)
  • KMG Chemicals Inc (KMGB.W)
  • Multi-Color Corporation (LABL.O)
  • P. H. Glatfelter Company (GLT)
  • R.R. Donnelley & Sons Company (RRD.W)
  • R.G. Barry Corporation (DFZ.W)
  • Red Back Mining Inc. (RBI.TO)
  • Stepan Company (SCL)
  • OAO “Vympel-Kommunikatsii” (VIP)
  • Wyndham Worldwide Corporation (WYN)

View stock screen results in spreadsheet format with valuation metrics.

With the powerful rally we’ve experienced, it surprise no one that none of these names are low-hanging, no-brainer stocks. With the market fairly/over-valued, we are going to have to dig in some far corners to find good value. As such, many of these stocks are tiny, with only 3 of the 14 names sporting market caps over $1B. The screening software gave little detail on the buy ratings so it is possible or likely that most of these stocks have only one or two analysts following the company. The flipside is many of these names seem quite attractive as possible opportunities, perhaps in part due to lack of coverage.

Remember this screen is only a jumping point. As always, further research is needed before devoting capital to any of these stocks, especially given the volatile business conditions of small-cap companies.

One Response to “Stock Screen: Analyst Darlings”

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