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Stock Picking Process Stock Picking Process Securities offered through LPL Financial. Member FINRA/SIPC. Stock investing involves risk including loss of.

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Presentation on theme: "Stock Picking Process Stock Picking Process Securities offered through LPL Financial. Member FINRA/SIPC. Stock investing involves risk including loss of."— Presentation transcript:

1 Stock Picking Process Stock Picking Process Securities offered through LPL Financial. Member FINRA/SIPC. Stock investing involves risk including loss of principal.

2 To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability of success. No strategy can assure success or guarantee against loss in declining markets. General risks inherent to investments in stocks include the fluctuation of market prices and dividend, loss of principal, market price at sell may be more or less than initial cost and potential illiquidity of the investment in a falling market

3 Master List Top 400 Stocks Scoring Process Final List TOP 25 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 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

7 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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9 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

10 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 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. 7 COMPANIES MET THE CRITERIA: AS OF February 28, 2013 COMPANY NAMESYMBOLSECTOR MYR Group IncMYRGCapital Goods Virtusa CorporationVRTUTechnology Assurant, Inc.AIZFinancial Hub Group IncHUBGTransportation Jones Lang LaSalle IncJLLServices Kulicke and Soffa IndustriesKLICTechnology USANA Health Sciences, Inc.USNAConglomerates

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

12 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

13 Second Screen* Second Screen*

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

15 %Chg = Percentage Change. 1Q = Recent quarter. Asset turnover = The amount of sales generated for every dollar’s worth of assets. CF = Cash Flow: a revenue or expense stream that changes a cash account over a given period. Current Ratio = A liquidity ratio that measures a company’s ability to pay short-term obligations. D = Days (example: 27D=27 Days) EPS = Earnings Per Share: the portion of a company’s profit allocated to each outstanding share of common stock. EPS Est. = An analyst’s estimate for a company’s future annual EPS. FCF = Free Cash Flow: a measure of financial performance calculated as operating cash flow minus capital expenditures. Gr. = Growth. Inventory Turnover = A ratio showing how many times a company’s inventory is sold and replaced over a period. LT Debt/Equity Ratio = Long-Term Debt/Equity Ratio: a measure of a company’s financial leverage calculated by dividing its long-term debt by stockholders’ equity. Net Income = A company’s total earnings (or profit). Net Margin = The ratio of net profits to revenues for a company, expressed as a percentage. Price/Book Ratio = A ratio used to compare a stock’s market value to its book value. P/E = Price to Earnings Ratio: A valuation ratio of a company’s current share price compared to its per-share earnings. P/FCF = Price to Free Cash Flow Ratio: A valuation metric that compares a company’s market price to its level of annual free cash flow. Glossary of Screen-Based Tests Investopedia AAII

16 P/S = Price to Sales Ratio: A ratio for valuing a stock relative to its own past performance, comparing a company’s market price to its level of annual revenue. Pr = Price (example: Pr4D%Chg=Four day price percentage change) Price/CF = Price to Cash Flow: A measure of the market’s expectations of a firm’s future financial health. Q1 = Present quarter Q2 = One quarter prior to the present quarter Q3 = Two quarters prior to the present quarter Q4 = Three quarters prior to the present quarter Q5 = Four quarters prior to the present quarter Q6 = Five quarter quarters prior to the present quarter Relative Strength = A measure of price trend that indicates how a stock is performing relative to other stocks in its industry. ROA = Return on Assets: an indicator of how profitable a company is relative to its total assets. ROE = Return on Equity: the amount of net income returned as a percentage of shareholders equity. ROI = Return on Investment: A performance measure used to evaluate the efficiency of an investment. The return of an investment is divided by the cost of the investment. TTM = Trailing Twelve Months: The timeframe of the past 12 months used for reporting financial figures. Turnover = The number of times an asset is replaced during a financial period. W = Weeks (example: 52W=52 Weeks) Y1 = Recent Year Y = Yearly (example: Y EPS= Yearly EPS), or Years (example: 3Y= 3 Years) Investopedia AAII Glossary of Screen-Based Tests


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