This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Screening for Fun and Profit Is Not Getting Easier

Stocks in this article: NUS EGN MLAB CSVI NEU JWA AWR FHCO

NEW YORK ( TheStreet) -- The mark of a good stock screen, in my view, is not only whether it produces solid results, but also its ability to identify investment candidates in all sorts of market environments.

That is a very tall order.

I've had plenty of success with the former. However, my value investing-based screens have had difficulty with the latter in this rising market environment. Every day, it seems, it becomes more difficult to identify value, but that comes with the territory.

I've known value managers who simply won't buy in market environments where they can't find stocks that meet their criteria, and they will not compromise by lowering their standards.

One year ago, I identified a list of potentially cheap small and midcap names with solid net profit margins and growing, sustainable dividends, based on the following criteria:

  • Market capitalization between $100 million and $5 billion
  • Net profit margin of at least 8% for the trailing 12 months and for the latest fiscal year
  • Dividend yield greater than 1%
  • At least four consecutive years of increasing dividends
  • Payout ratio less than 50%
  • Price earnings ratio of less than 20
  • No financials

This screen revealed a list of 18 qualifiers. But in the past year, that group of companies has returned an average of 48.5%, versus 27.8% for the S&P 500, 31.5% for the S&P Mid Cap Index, and 41.2% for the S&P Small Cap Index.

What's more, all of the stocks had positive returns during the period. The biggest winner was anti-aging personal care products company Nu Skin Enterprises (NUS), which was up 181%. Oil and gas company Energen (EGN) was up 68%, while medical instruments company Mesa Laboratories (MLAB) rose 62%.

The "worst" performers included Computer Services (CSVI), up 13%; petroleum additive and real estate development company NewMarket (NEU), up 21.5%; and publisher John Wiley & Sons (JWA), up 25%).

Just one year later, however, my screen is -- not surprisingly -- producing very limited results. In fact, just three companies currently meet the screening rather stringent criteria. One of the three is a holdover from last year, Computer Services, which currently trades for about 18.5 times trailing 12 month earnings, yields 1.9%, and has a 12.7% trailing 12 month net profit margin. The company recently authorized a $5 million increase in its current stock buyback program.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs