A Wealth of Opportunities

Investment Analysis Clubs Saul’s Investing Discussions
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“Hello, my name is Tiptree, and I am a recovering CAN-SLIM trader. I haven’t looked for a cup-and-handle pattern for over 10 years.”

“Hi Tiptree”

Yes, it is true. This Motley Fool fanboy was once a devotee of charts and momentum investing. Sometime between my initial “National Association of Investment Clubs” days, and my full embrace of Foolishness about 15 years ago, I dabbled in CAN-SLIM investing. I pored over the pages of IBD and took a lot of flyers on stocks without ever looking at a balance sheet or income statement. It worked…sometimes. But I finally wised up, went cold-turkey, and developed a more traditional, fundamental-analysis method for searching for high-quality growth companies. That has worked phenomenally well, giving me no regrets for abandoning William O’Neil and his methods.

But I still suscribe to IBD on-line, and get the weekend edition of the print version of IBD. I find some data useful for evaluating the timeliness of an investment can be found there. And I love it when the IBD ranking, the “SSG” I learned how to construct in my old NAIC days, and my own Tiptree research all say “buy”. It is a triple confirmation signal that I rarely ignore.

So, today I sat down and went through last weekend’s “IBD 50”, the 50 top-ranked stocks in the IBD way of evaluating companies. Each has a little box with a chart and a few data elements in it. I went through and circled the ones that had an annual EPS growth rate that exceeded the PE ratio, a crude way of screening for 1YPEG candidates. Of the 50 companies highlighted, no fewer than 21 made it past that simple screen.

Twenty one. Over forty percent of the top performing companies in the IBD scheme were potential low 1YPEG stocks. Now, this is not exactly true, since it is using GAAP earnings, but YOWSA! That is a lot of opportunities!

Here is the complete list, with the corresponding ranking within the IBD 50:

  1. Ambarella (AMBA)
  2. Cambrex (CBM)
  3. Valeant Pharma (VRX)
  4. Arista Networks (ANET)
  5. Blackhawk Network (HAWK)
  6. Universal Insurance (UVE)
  7. Allergan (AGN)
  8. United Therapeutics (UTHR)
  9. Icon (ICLR)
  10. Regeneron (REGN)
  11. Facebook (FB)
  12. Lannett (LCI)
  13. Foot Locker (FL)
  14. Cal-Maine Foods (CALM)
  15. Amtrust Financial (AFSI)
  16. Wisdomtree invesments (WETF)
  17. Gilead Sciences (GILD)
  18. Signature Bank (SBNY)
  19. Tesboro (TSO)
  20. SS&C Technologies (SSNC)
  21. Constellation Brands (STZ)

I own only five of these, and options on a sixth. Just thought I would throw this out there as another confirmation data element of the 1YPEG method. Lots of food for thought there!

Tiptree, Fool One guide with a checkered past… :slight_smile:

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That’s crazy TMFTiptree - I do the same thing! I don’t subscribe to IBD, but I go to the library to read the top 50 list in Wednesday’s paper. I jot them down, and compare them to Kevin’s amazing spreadsheet. It’s a great way to begin the process.

~TracyK

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Hi, I’m Poz, and I still use TA…along with FA…along with large doses of cynicism and I’m not yet in recovery for this…

Twenty one. Over forty percent of the top performing companies in the IBD scheme …

Does “top performing” translate into top “real income” accounting for shares transferred to insiders from Treasury Stock (Balance Sheet) and subtracted from earnings reported on the Income Statement?

Wake me up when the numbers get to 80%…

Poz

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Does “top performing” translate into top “real income” accounting for shares transferred to insiders from Treasury Stock (Balance Sheet) and subtracted from earnings reported on the Income Statement?

Wake me up when the numbers get to 80%…

Poz

Or, alternatively, do you own due diligence? Geez. Someone gives you a list of possibilities, which costs you zero, and you p1ss on them?

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Or, alternatively, do you own due diligence? Geez. Someone gives you a list of possibilities, which costs you zero, and you p1ss on them?

Somebody on an anonymous message board didn’t give me any possibilities that I consider worth any more than I paid for them. A list of stock symbols can be generated by anybody for any reason. I gave them none in return.

They cavalierly dismissed something (TA) and in a manner I found offensive so I returned the “flavor” in kind.

You don’t like it, well neither did I. If you call that urinating, well your as entitled to your opinion as I am mine and we are both entitled to share it.

Or did I miss the secret handshake or something?

I’ve done my own research, lived quite well off of it. I lived even better off of it when I combined it with TA. No it wasn’t CANSLIM, but I read it’s methodology a number of years ago, understood it, and saw that it wasn’t for me. That does not translate into all TA being useless by any stretch. I have no use for IBD, nor do I find any value in their lists. But I don’t just get cute and dismiss them for a prank or whatever. William O’Neil has made a lot of money both from his thinking about the markets and his paper. That is no mean feat.

BTW. TA and FA both strongly suggest that the malinvestment done due to zero to negative interest rates over the last 6+ years is not wiped away in a week or so. So, yes, I think the list will double, hence the comment wake me up when its 80% and everybody knows stocks only go down.

Could I be wrong about that? Sure. Could I be right? Sure. I’ve placed my money where my thinking is and have had a very nice day and week because of it. So what? None of us is scheduled (unless I missed the memo) for infallibility either in style or content or results.

If somebody needs protecting from the responses to their posts, well, that’s pretty sorry.

Poz

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I don’t think there is a secret handshake, common courtesy is not a secret, that is why we call it common, it can be shared with all. Sort of like common denominator, common law, from the same latin root as community, communitatem.
Pax communitatem
Mike

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