This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Stocks Selected From the Toughest Screening Process

(Add to note Cliffs Natural Resources add to Goldman Sachs "conviction buy" list.)

BOSTON ( TheStreet) -- The Auer Growth Fund (AUERX) has three strict criteria in its stock-selection process, and once in the portfolio, if a company fails to continue to meet them, they're out -- fast.

The criteria are: a 25% increase in earnings per share each quarter; 20% revenue growth per quarter; and trade below 12 times earnings.

"If they stop doing that, we sell them, or if they double (in price), we sell them," said Bob Auer, founder and manager of the $136 million fund.

"We've been doing this for 25 years," he said of the investing style. He brought the fund out as a retail mutual fund about three years ago.

Auer said the premise was spawned in 1986 when he was a broker in Indianapolis for Dean Witter, a long-gone national brokerage and helping his father invest his $100,000 individual retirement account. By strictly sticking to that simple investing strategy, and the addition of another $10,000, the account grew to $34 million by the end of 2007.

Auer admits that his Growth Fund's performance "zigs and zags, since it's so different from the market. We're now about 18% behind the market (this year and market conditions are) similar to 1989," when traditional fundamentals lose their importance.

"Every 10 years or so we have a period where we fall flat on our face," but Auer swears by the success of his approach.

The fund is down 13% this year versus the S&P 500's 2.3% gain. It has a three-year average annual gain of 14% versus the benchmark index's 15.4%.

Auer said that from 1999 to the end of 2009, in the so-called "lost decade," when the S&P 500 lost 1% per year, his fund went up 10-fold and that includes a 53% down year.

Here are five stocks that Bob Auer says are representative of his fund:
1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ABX $7.13 0.00%
CJES $5.13 0.00%
CLF $3.83 0.00%
GT $29.52 0.00%
MOS $41.04 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs