NEW YORK ( TheStreet) -- Last Friday's column focused on the one-year results of a screen that I utilize for identifying promising companies trading below tangible book value. While the returns were compelling, the true mark of a successful stock screen is its ability (or lack thereof) to demonstrate consistent outperformance. In truth, with markets on the rise over the past year, this was a fairly easy environment in which to outperform.
Although I was not disappointed by the average 50% gain in the seven companies I selected from the results of my screen, it won't be that easy over the coming year.
First off, last year's screen actually revealed several dozen companies that met the screening criteria. I then selected the seven that appeared to be the most promising. Just one year later, the ranks are much thinner, with just 30 candidates. This is not all that surprising; in rising markets, value is harder to find. This year's candidates are also significantly smaller, in terms of market cap, than last year's crop and significantly less well known and followed. By way of reminder, the screening criteria are as follows:
- No financial names
- Long-term debt to equity less than 50%
- Companies must be profitable on a trailing 12 month basis
- Minimum market cap $100 million
Aircraft and aviation outsourcing company
Atlas Air Worldwide Holdings
(AAWW - Get Report)
, is one of the more intriguing names. Currently trading at just .77 times tangible book value, Atlas also appears inexpensive at 8.5 times trailing earnings, and the same multiple of 2014 consensus analyst estimates. The company has also been buying back stock, and has reduced shares outstanding by 5% since year-end 2012.
Atlas has not participated in the current rally, and shares are down 9% over the past twelve months. In fact, the stock was damaged substantially last month, falling 24% on October 31st, after the company announced disappointing guidance for the remainder of this year.