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Stock Picking Process Stock Picking Process. To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability.

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Presentation on theme: "Stock Picking Process Stock Picking Process. To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability."— Presentation transcript:

1 Stock Picking Process Stock Picking Process

2 To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability of success.

3 Master List Top 400 Stocks Scoring Process Final List TOP PROBABILITY STOCKS Popular Lists Ultimate List Top 100 Stocks Analyst Favorites Category Value Category Growth Category Sentiment Category Second Screen Quality Category Screen-Based List Current List First Screen INVESTING UNIVERSE

4 400 Investing Universe 10,000+ Stocks 25 Stock Stars Ultimate List 100 Stocks 100 Master List 400 Stocks

5 INVESTING UNIVERSE First Screen Three Evaluation Lists Current List: - Current Nominees - Personal Nominees Screen-Based List: -Value Screen -Growth Screen -Momentum Screen Master List TOP 400 Stocks Popular List: -Top 50 stocks IBD -Top 100 stocks VL -Top 36 stocks SS -Top 37 stocks MS -Top 50 stocks B

6 Top 100 Stocks: Investors Business Daily The IBD 50 is a list of 50 top-rated growth stocks in IBDs database with top fundamentals showing strong relative price strength in the market. Criteria to pick stocks: –EPS Rating –Relative Price Strength –Return on Equity –Management Ownership

7 INVESTING UNIVERSE First Screen Three Evaluation Lists Current List: - Current Nominees - Personal Nominees Screen-Based List: -Value Screen -Growth Screen -Momentum Screen Master List TOP 400 Stocks Popular List: -Top 50 stocks IBD -Top 100 stocks VL -Top 36 stocks SS -Top 37 stocks MS -Top 50 stocks B

8 SCREEN-BASED LIST Investment Style: VALUE Screen Tests Investment Style: MOMENTUM Screen Tests Growth Screen 2 Comparative & Financial Strength Stock Screener Growth Screen 1 Relative Growth Value Screen 1 Relative Value Value Screen 2 Comparative Value & Growth Value Screen 3 Contrarian Opportunities Growth Screen 3 Comparative & Sustainable Growth Momentum Screen 2 Moving Average & Behavioral Momentum Screen 3 Relative Momentum Investment Style: GROWTH Screen Tests Momentum Screen 1 Relative Strength Stock Screener

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10 1.P/E Ratio <= Indy. Avg. P/E 2.Price/Sales <= Indy. Avg. P/S 3.TTM ROE > Indy. Avg. TTM ROE 4.TTM ROE > 0 5.5 y Avg. ROE > 5 Y Indy. Avg. ROE 6.LT Debt/Equity ratio <= Indy. Avg. LT Debt Ratio 7.Price/Book <= 3 8.EPS Growth Est. > Indy. Avg. EPS Growth Est. 9.Y1 EPS Est. Growth > 0 Value Screen 2: Comparative Value

11 FIELDOPERATORCOMPARE TO: STOCKS P/E Ratio<=Indy. Avg. P/E2190 Price/Sales<=Indy. Avg. P/S3581 TTM ROE>Indy. Avg. TTM ROE4464 TTM ROE>05909 5 Y Avg. ROE>5 Y Indy. Avg. ROE3452 LT Debt/Equity Ratio<= Indy. Avg. LT Debt/Equity Ratio3864 Price/Book<=Average Price/Book Ratio5459 EPS Growth Est.>Indy. Avg. EPS Growth Est.1236 1Y EPS Est. Growth>0832 Screen Results: Value Screen 2 7 COMPANIES MET THE CRITERIA: AS OF September 1, 2012 COMPANY NAMESYMBOLSECTOR 3SBio Inc. (ADR)SSRXHealth Care Assurant, Inc.AIZFinancial Baker Hughes IncorporatedBHIEnergy G-III Apparel Group, Ltd.GIIIConsumer Cyclical Halliburton CompanyHALEnergy Medicines Company, TheMDCOHealth Care WellCare Health PlansWCGHealth Care Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors.

12 INVESTING UNIVERSE 10,000 + Stocks Master List TOP 400 Stocks First Screen

13 Second Screen Analyst Favorites Category: 1.Most Repeated Stocks Value Category: 1.Catching Up Stocks Quality Category: 1.Industry Leaders 2.Fastest Turnover Growth Category: 1.Historical comparison 2.Industry Comparison Sentiment Category: 1.High P/E Multiples 2.Institutional Ownership Second Screen Master List Top 400 Stocks

14 Second Screen* Second Screen*

15 Third Screen Ultimate List: Top 100 Scoring Process: - Growth Score - Profitability Score - Financial Health Score - Momentum Score Stock Stars List TOP PROBABILITY STOCKS

16 As of August 31, 2012 - Subject to change. September 2012 Stock Picks TOP 25 STOCKSSeptember-12 RANKTICKERNAMESECTORINDUSTRYSCORE 1TFMFresh Market Inc, The09 - Services0957 - Retail (Grocery)79.39 2TJXTJX Companies, Inc., The09 - Services0945 - Retail (Apparel)78.72 3CFCF Industries Holdings, Inc.01 - Basic Materials0103 - Chemical Manufacturing78.06 4PETMPetSmart, Inc.09 - Services0963 - Retail (Specialty Non-Apparel)77.57 5RAXRackspace Hosting, Inc.10 - Technology1036 - Software & Programming77.30 6ADSAlliance Data Systems Corporat07 - Financial0703 - Consumer Financial Services77.17 7RMDResMed Inc.08 - Health Care0812 - Medical Equipment & Supplies76.77 8ALXNAlexion Pharmaceuticals, Inc.08 - Health Care0803 - Biotechnology & Drugs76.55 9ROSTRoss Stores, Inc.09 - Services0945 - Retail (Apparel)76.48 10AAPLApple Inc.10 - Technology1006 - Computer Hardware76.39 11ULTAUlta Salon, Cosmetics & Fragra09 - Services0963 - Retail (Specialty Non-Apparel)75.82 12ELEstee Lauder Companies Inc 05 - Consumer Non- Cyclical0521 - Personal & Household Products75.32 13GILDGilead Sciences, Inc.08 - Health Care0803 - Biotechnology & Drugs75.18 14AGUAgrium Inc. (USA)01 - Basic Materials0103 - Chemical Manufacturing74.86 15HFCHollyFrontier Corp06 - Energy0609 - Oil & Gas Operations74.76 16ESRXExpress Scripts Holding Co09 - Services0954 - Retail (Drugs)74.53 17TSCOTractor Supply Company09 - Services0960 - Retail (Home Improvement)74.09 18WDCWestern Digital Corp.10 - Technology1021 - Computer Storage Devices74.03 19EBAYeBay Inc09 - Services0948 - Retail (Catalog & Mail Order)73.49 20NEUNewMarket Corporation01 - Basic Materials0103 - Chemical Manufacturing73.38 21SWISolarWinds Inc10 - Technology1036 - Software & Programming72.91 22CRUSCirrus Logic, Inc.10 - Technology1033 - Semiconductors72.78 23CTBCooper Tire & Rubber Company04 - Consumer Cyclical0436 - Tires72.29 24SCSSSelect Comfort Corp.04 - Consumer Cyclical0421 - Furniture & Fixtures71.97 25UTHRUnited Therapeutics Corporatio08 - Health Care0803 - Biotechnology & Drugs70.68

17 September 2012 Stock Picks

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19 Process is dynamic but we are not traders Buying and selling designed to follow trends Our Stock Selection Discipline


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