The Economy

While stocks have begun to rebound from the correction that began last May, the economic news has been mediocre, with strong US manufacturing performance being offset by a sluggish housing market and continued weakness overseas.

On the positive side, after three months of declines, industrial production surged in January, rising 0.9%, according to a new Federal Reserve report. Manufacturing output jumped 0.5%, and seasonally dependent utility output increased 5.4%. Mining output was flat. The energy sector and automotive industry saw some of the biggest jumps in production for the month. December's decline was revised from -0.4% to -0.7%.

Retail and food service sales also rose 0.2% in January, according to a new report from the Census Bureau. Compared to the year-ago period, they were up just 1.4% year-over-year, however, not a particularly strong annual gain.

On the downside, housing starts dipped 3.8% in January, according to the Census Bureau, and are less than 1% above year-ago levels. Permit issuance for new construction fell 0.2%, but is 6.7% above where it stood a year ago.

New home sales, meanwhile, tumbled 9.2% in January, according to the Census Bureau. That put them about 5% below where they were a year ago. The main culprit behind the January declines: the horrible performance in the West region, where sales tumbled more than 30% compared to December.

Overseas, China's latest data was very disappointing. Exports were down 11.2% year-over-year, far worse than the 3.6% decline analysts had expected. Shipments to Europe and Southeast Asia were particularly weak. The big decline in exports appears to be more about global demand than Chinese competitiveness, as China's share of the global export market has not declined much, according to the Financial Times. Chinese imports, meanwhile, were down 18.8%, year-over-year, more than 10 times worse than the 1.8% decline analysts had expected.

As for oil and gas prices, oil has stabilized a bit around the $30 mark but gas prices keep falling. A gallon of regular unleaded on average cost $1.71 on February 24, down from $1.83 a month earlier, according to AAA. That's about 26% below where it was a year ago.

The downward pressure on energy prices is keeping overall inflation very tame. The Consumer Price Index was unchanged in January, and just 1.4% ahead of its year-ago level. When volatile energy and food prices are stripped out, however, the January gain was a pretty strong 0.3%, and the year-over-year gain is 2.2%. Among the areas that experienced significant inflation in January: apparel, medical care commodities, transportation, and medical care services. The non-energy sector inflation is something to keep an eye on going forward.

Since our last newsletter, the S&P 500 returned 6.7%, while the Hot List returned 12.3%. So far in 2016, the portfolio has returned 1.5% vs. -4.5% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 186.0% vs. the S&P's 95.1% gain.

Portfolio Update: Major Gains

What a couple weeks for the Hot List. Despite one of our holdings sustaining a 20% loss in a single trading day earlier this week, the portfolio had a stellar fortnight. Eight of its 10 holdings are in the black since our last newsletter, with six up more than 10% and one posting gains close to 30%.

Leading the way was Altisource Portfolio Solutions (ASPS), the Luxembourg-based real estate mortgage portfolio manager, which surged 28%. The stock's huge rise was a bit of a mystery -- no new earnings report, no big analyst upgrade, no big news at all, really. Part of the increase may be that investors have simply begun to realize the tremendous value in the stock, which still trades for less than nine times earnings even after its recent run-up. Hedge fund guru Leon Cooperman has recently been raising his stake in ASPS, so that may be helping generate optimism, too.

Another big winner: Forum Energy Technologies (FET), which jumped 17%. The oilfield products company reported fourth-quarter earnings that missed Wall Street expectations on Feb. 11, the day before it joined the Hot List. Despite that, shares began to rise shortly thereafter, perhaps because it posted revenue that exceeded forecasts.

Cal-Maine Foods (CALM) also had an excellent couple weeks, gaining more than 15%. As with Altisource, there didn't seem to be a specific catalyst for the gains. Other nice performers included Banco Macro (BMA), Thor Industries (THO) and Zumiez (ZUMZ), all of which gained between 11% and 13%.

On the downside, Lumber Liquidators (LL) was down about 9% -- which is actually not bad, when you consider that the stock plummeted nearly 20% in a single trading day. That decline occurred after U.S. health regulators said certain types of laminate flooring offered by the much-maligned company have a greater risk of causing cancer or other health problems than previously believed. The Centers for Disease Control and Prevention said those who bought the flooring are about three times more likely to get cancer than it had previously calculated -- the result of a math error. But Lumber Liquidators' solid performance outside of that one day kept it from having too negative impact on the portfolio.

A number of forces are likely to play in the strong gains we've seen over the past couple weeks. For one, stocks in general have been bouncing back from the correction that started last May, and small stocks in particular have performed well. Three of the six double-digit winners mentioned above have market capitalizations below $1 billion, while the other three are smaller mid-caps, with market caps between $2.5 billion and $4.1 billion.

A number of the big winners also have high amounts of short interest in them. As the market began to turn, many shorts may have started to throw in the towel.

Then, of course, there's the fact that these stocks have excellent fundamentals and attractive valuations. As the market has turned, many investors may have begun to notice the bargains that their fears were preventing them from seeing. As we move forward, that will hopefully continue.



Guru Spotlight: Warren Buffett, Interest Rates, and Value Stocks

In their book Buffettology -- which forms the basis of my Warren Buffett-inspired Guru Strategy -- Mary Buffett and David Clark explain that the Oracle of Omaha wants his stocks to have an earnings yield (that's earnings per share/share price) above the long-term Treasury yield. In the world of 2% to 3% long-term Treasury yields that we've seen over the past several years, that standard may seem like a weak one to use. After all, that means the Buffett approach is currently okay with a stock that has an earnings yield of about 2.2% -- which equates to a far-from-bargain-priced price/earnings ratio of about 45.

But the Treasury yield comparison is not arbitrary -- and it helps explain why value stocks may be a good bet in the coming years.

Let's take a look at Buffett's logic in using the earnings yield-Treasury yield comparison. Buffett believes that good investors treat a stock like a share of business, not a piece of paper whose value goes up and down from day-to-day. He knows that stock prices are subject to the whims of emotional investors in the short term, but dependent on a company's ability to increase earnings over the long-term. That's why the first page of his Berkshire Hathaway annual reports include an examination not of how Berkshire's stock price has moved over the past year, but of how its per-share book value has grown. He knows that if the company continues to grow earnings and book value, over the long term its share price will reflect that growth.

Since he looks at a stock like a share of a business, Buffett sees its earnings yield as his initial return on investment. If a stock has an earnings yield of 5% (that's equivalent to a P/E ratio of 20), he sees that as a 5% initial rate of return; if its earnings were to hold steady, you would expect the stock to rise 5% per year over the long haul, given that, over the long haul, stock prices tend to follow earnings growth.

Since a Treasury is essentially "risk-free" in the sense that, if it is held to maturity you are guaranteed the coupon rate return, it follows that Buffett would want his initial rate of return on a stock to be higher than the rate of return on a Treasury. Why deal with the inherent risk of the stock market if you can count on getting just as high rate of return from risk-free government bonds? Sure, a company -- unlike a bond -- can increase earnings and thus raise its rate of return as the years pass. But Buffett doesn't want to count on a firm having to increase earnings to make its stock a better deal than a government bond. He wants the bird in hand. (In addition, he wants companies to have demonstrated a decade-long history of rising earnings, regardless of magnitude. That way, he can be sure that the annual earnings figure upon which he is basing his initial rate of return is not an anomaly.)

But that certainly isn't the only one who thinks of stocks in relation to interest rates. Part of the reason that the Federal Reserve has kept interest rates so low has been a desire to push investors into more risky assets like stocks. After the financial crisis, investors remained very skittish, and the Fed wanted generate some positive animal spirits. Keeping rates so low made stocks an attractive alternative to safe, defensive assets like bonds.

That's had some interesting consequences, though. As I have discussed in past newsletters, higher-priced growth stocks have been beating value stocks for several years now, and I think the low-interest-rate environment has certainly contributed to that. If you look at stocks through Buffett's earnings yield/Treasury yield lens, you can see why. Long-term Treasury yields have been in the 2% to 3% range. If we say the average has been around 2.5%, that means any stock with an earnings yield above 2.5% -- that is, with a P/E up to 40 -- has been offering a more attractive return than a Treasury bond, according to Buffett's thinking. Environments like that encourage investors to go after pricier stocks they might otherwise be leery of -- particularly if those stocks are expected to be growing earnings in a climate in which overall growth has been somewhat sluggish.

Now, however, we've entered a tightening phase. While it appears that the tightening will be slow, investors are on notice nonetheless. This should be good news for value stocks. Think about it: if the Treasury yield gets up to, say, just 4%, a stock will need to have a P/E ratio lower than 25 to offer an earnings yield of about 4%. Suddenly, those pricey growth stocks trading at 40 or 50 times earnings look a lot less attractive. Value stocks, on the other hand, tend to trade below about 15 times earnings -- that's an earnings yield of about 7% or higher, still well above that hypothetical 4% Treasury rate. (Plus, the future earnings that the growth stocks are expected to generate now look less attractive.)

Of course, all investors are not as rational as Buffett. But I think that, in general, a rising rate climate should benefit value stocks. That's good news for value-conscious portfolios like ours. I'm not saying that rates are going to start rising rapidly tomorrow or that value stocks will start surging. But when you step back and look at the broader environment, I think it bodes well.

With all of this in mind, I thought we could take a look at some stocks that get strong interest from my Buffett-inspired model. Here are the top 10, ranked by P/E ratio.

Stocks Receiving Strong Interest From Warren Buffett-based Strategy

Screen Shot 2016-02-26 at 7.49.32 AM

As of Feb. 26, 2016





News about Validea Hot List Stocks

Sanderson Farms (SAFM): Sanderson on Thursday reported fiscal first-quarter earnings of $10.7 million, or 47 cents per share. That beat Wall Street expectations of 27 cents per share, helping the poultry producer's shares jump more than 4% on the day.

Dril-Quip (DRQ): Dril-Quip reported fourth-quarter net income of $48.4 million, or $1.28 per share. Adjusted for non-recurring gains, earnings were $1.20 per share, beating Wall Street expectations of $1.06 per share. Dril-Quip's revenue of $201.6 million also beat forecasts of $197.2 million. But forward guidance fell short of expectations, and shares fell about 2% the day of the announcement.



The Next Issue

In two weeks, we will publish another issue of the Hot List, at which time we will rebalance the portfolio. If you have any questions, please feel free to contact us at hotlist@validea.com.

Portfolio Holdings
Ticker Date Added Return
CALM 11/20/2015 -4.7%
BMA 11/20/2015 6.2%
ASPS 1/15/2016 31.1%
LL 1/15/2016 -7.5%
DRQ 1/15/2016 -7.2%
SAFM 2/12/2016 6.3%
THO 2/12/2016 11.5%
ZUMZ 2/12/2016 11.5%
OII 2/12/2016 -3.5%
FET 2/12/2016 17.4%


Guru Analysis
Disclaimer: The analysis is from Validea's selection and interpretation of content from the guru's book or published writings, and is not from nor endorsed by the guru. See Full Disclaimer

CALM   |   BMA   |   ASPS   |   LL   |   DRQ   |   SAFM   |   THO   |   ZUMZ   |   OII   |   FET   |  

CAL-MAINE FOODS INC

Strategy: Contrarian Investor
Based on: David Dreman

Cal-Maine Foods, Inc. is a producer and marketer of shell eggs in the United States. The Company's primary business is the production, grading, packaging, marketing and distribution of shell eggs. The Company sells its shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. The Company markets its shell eggs through its distribution network to a group of customers, including national and regional grocery store chains, club stores, foodservice distributors and egg product consumers. Some of its sales are completed through co-pack agreements. It has a total flock of approximately 33.7 million layers and 8.4 million pullets and breeders. The Company markets its specialty shell eggs under brands, such as Egg-Land's Best, Land O' Lakes, Farmhouse and 4-Grain. The Company also produces, markets and distributes private label specialty shell eggs to several customers.

MARKET CAP: PASS

Medium to large-sized companies (the largest 1500 companies) should be chosen, because they are more in the public eye. Furthermore, the investor is exposed to less risk of "accounting gimmickry", and companies of this size have more staying power. CALM has a market cap of $2,624 million, therefore passing the test.


EARNINGS TREND: FAIL

A company should show a rising trend in the reported earnings for the most recent quarters. CALM's EPS for the latest quarter is not greater than the prior quarter, (from earliest to most recent quarter) 2.95, 2.26. Hence the stock fails this test, but the investor should evaluate this company qualitatively to see if it qualifies under this methodology's "exception rule".


EPS GROWTH RATE IN THE IMMEDIATE PAST AND FUTURE: PASS

This methodology likes to see companies with an EPS growth rate higher than the S&P in the immediate past and a likelihood that this trend will continue in the near future. CALM passes this test as its EPS growth rate over the past 6 months (137.89%) has beaten that of the S&P (-1.33%). CALM's estimated EPS growth for the current year is (131.83%), which indicates the company is expected to experience positive earnings growth. As a result, CALM passes this test.


This methodology would utilize four separate criteria to determine if CALM is a contrarian stock. In order to eliminate weak companies we have stipulated that the stock should pass at least two of the following four major criteria in order to receive "Some Interest".


P/E RATIO: PASS

The P/E of a company should be in the bottom 20% of the overall market. CALM's P/E of 7.51, based on trailing 12 month earnings, meets the bottom 20% criterion (below 10.85), and therefore passes this test.


PRICE/CASH FLOW (P/CF) RATIO: FAIL

The P/CF of a company should be in the bottom 20% of the overall market. CALM's P/CF of 6.66 does not meet the bottom 20% criterion (below 5.74), and therefore fails this test.


PRICE/BOOK (P/B) VALUE: FAIL

The P/B value of a company should be in the bottom 20% of the overall market. CALM's P/B is currently 3.01, which does not meet the bottom 20% criterion (below 0.82), and it therefore fails this test.


PRICE/DIVIDEND (P/D) RATIO: FAIL

The P/D ratio for a company should be in the bottom 20% of the overall market (that is the yield should be in the top 20%). CALM's P/D of 20.41 does not meet the bottom 20% criterion (below 17.06), and it therefore fails this test.


This methodology maintains that investors should look for as many healthy financial ratios as possible to ascertain the financial strength of the company. These criteria are detailed below.


CURRENT RATIO: PASS

A prospective company must have a strong Current Ratio (greater than or equal to the average of it's industry [3.92] or greater than 2). This is one identifier of financially strong companies, according to this methodology. CALM's current ratio of 3.02 passes the test.


PAYOUT RATIO: PASS

A good indicator that a company has the ability to raise its dividend is a low payout ratio. The payout ratio for CALM is 33.35%, while its historical payout ratio has been 33.50%. Therefore, it passes the payout criterion.


RETURN ON EQUITY: PASS

The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 large cap stocks, which is 16.52%, and would consider anything over 27% to be staggering. The ROE for CALM of 46.24% is high enough to pass this criterion.


PRE-TAX PROFIT MARGINS: PASS

This methodology looks for pre-tax profit margins of at least 8%, and considers anything over 22% to be phenomenal. CALM's pre-tax profit margin is 26.84%, thus passing this criterion.


YIELD: PASS

The company in question should have a yield that is high and that can be maintained or increased. CALM's current yield is 4.90%, while the market yield is 2.92%. CALM passes this test.


LOOK AT THE TOTAL DEBT/EQUITY: PASS

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 25.56%. CALM's Total Debt/Equity of 3.30% is considered acceptable.


BANCO MACRO SA (ADR)

Strategy: Growth Investor
Based on: Martin Zweig

Banco Macro S.A. (the Bank) is a bank. The Bank offers traditional bank products and services to companies, including those operating in regional economies, as well as to individuals. The Bank offers savings and checking accounts, credit and debit cards, consumer finance loans (including personal loans), mortgage loans, automobile loans, overdrafts, credit-related services, home and car insurance coverage, tax collection, utility payments, automatic teller machines (ATMs) and money transfers. The Bank offers Plan Sueldo payroll services, lending, corporate credit cards, mortgage finance, transaction processing and foreign exchange. The Bank offers transaction services to its corporate customers, such as cash management, customer collections, payments to suppliers, payroll administration, foreign exchange transactions, foreign trade services, corporate credit cards and information services, such as its Datanet and Interpymes services.


P/E RATIO: PASS

The P/E of a company must be greater than 5 to eliminate weak companies, but not more than 3 times the current Market P/E because the situation is much too risky, and never greater than 43. BMA's P/E is 12.83, based on trailing 12 month earnings, while the current market PE is 15.00. Therefore, it passes the first test.


REVENUE GROWTH IN RELATION TO EPS GROWTH: PASS

Revenue Growth must not be substantially less than earnings growth. For earnings to continue to grow over time they must be supported by a comparable or better sales growth rate and not just by cost cutting or other non-sales measures. BMA's revenue growth is 42.07%, while it's earnings growth rate is 44.21%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, BMA passes this criterion.


SALES GROWTH RATE: FAIL

Another important issue regarding sales growth is that the rate of quarterly sales growth is rising. To evaluate this, the change from this quarter last year to the present quarter (35.9%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (79%) of the current year. Sales growth for the prior must be greater than the latter. For BMA this criterion has not been met and fails this test.


The earnings numbers of a company should be examined from various different angles. Three of these angles are stability in the trend of earnings, earnings persistence, and earnings acceleration. To evaluate stability, the stock has to pass the following four criteria.


CURRENT QUARTER EARNINGS: PASS

The first of these criteria is that the current EPS be positive. BMA's EPS ($2.19) pass this test.


QUARTERLY EARNINGS ONE YEAR AGO: PASS

The EPS for the quarter one year ago must be positive. BMA's EPS for this quarter last year ($0.13) pass this test.


POSITIVE EARNINGS GROWTH RATE FOR CURRENT QUARTER: PASS

The growth rate of the current quarter's earnings compared to the same quarter a year ago must also be positive. BMA's growth rate of 1,584.62% passes this test.


EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: FAIL

Compare the earnings growth rate of the previous three quarters with long-term EPS growth rate. Earnings growth in the previous 3 quarters should be at least half of the long-term EPS growth rate. Half of the long-term EPS growth rate for BMA is 22.10%. This should be less than the growth rates for the 3 previous quarters which are 25.00%, 18.18% and 214.29%. BMA does not pass this test, which means that it does not have good, reasonably steady earnings.


This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: PASS

If the growth rate of the prior three quarter's earnings, 73.08%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 1,584.62%, (versus the same quarter one year ago) then the stock passes.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN THE HISTORICAL GROWTH RATE: PASS

The EPS growth rate for the current quarter, 1,584.62% must be greater than or equal to the historical growth which is 44.21%. BMA would therefore pass this test.


EARNINGS PERSISTENCE: PASS

Companies must show persistent yearly earnings growth. To fulfill this requirement a company's earnings must increase each year for a five year period. BMA, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 0.13, 0.18, 0.27, 0.40 and 0.57, passes this test.


LONG-TERM EPS GROWTH: PASS

One final earnings test required is that the long-term earnings growth rate must be at least 15% per year. BMA's long-term growth rate of 44.21%, based on the average of the 3, 4 and 5 year historical eps growth rates, passes this test.


ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Strategy: Small-Cap Growth Investor
Based on: Motley Fool

Altisource Portfolio Solutions S.A. is a provider of marketplace and transaction solutions for the real estate, mortgage and consumer debt industries offering both distribution and content. The Company operates in three segments: Mortgage Services, Financial Services and Technology Services. The Company's Mortgage Services segment provides services that span the mortgage and real estate lifecycle, and are outsourced by loan servicers, loan originators, investors and other sellers of single family homes. The Financial Services segment provides collection and customer relationship management services to debt originators and servicers, and the utility, insurance and hotel industries. The Company's Technology Services consists of REALSuite of software applications, Equator, LLC (Equator) software applications, Mortgage Builder software applications and its information technology (IT) infrastructure management services.


PROFIT MARGIN: PASS

This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. ASPS's profit margin of 8.51% passes this test.


RELATIVE STRENGTH: PASS

The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. ASPS, with a relative strength of 94, satisfies this test.


COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: FAIL

Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for ASPS (1.68% for EPS, and -5.18% for Sales) are not good enough to pass.


INSIDER HOLDINGS: FAIL

ASPS's insiders should own at least 10% (they own 0.42%) of the company's outstanding shares. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive.


CASH FLOW FROM OPERATIONS: PASS

A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. ASPS's free cash flow of $5.61 per share passes this test.


PROFIT MARGIN CONSISTENCY: FAIL

The profit margin in the past must be consistently increasing. The profit margin of ASPS has been inconsistent in the past three years (Current year: 12.46%, Last year: 16.92%, Two years ago: 19.46%), which is unacceptable. This inconsistency will carryover directly to the company's bottom line, or earnings per share.


R&D AS A PERCENTAGE OF SALES: NEUTRAL

This criterion is not critically important for companies that are not high-tech or medical stocks because they are not as R&D dependant as companies within those sectors. Not much emphasis should be placed on this test in ASPS's case.


CASH AND CASH EQUIVALENTS: PASS

ASPS's level of cash $161.4 million passes this criteria. If a company is a cash generator, like ASPS, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash.


ACCOUNT RECEIVABLE TO SALES: PASS

This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for ASPS was 13.85% last year, while for this year it is 10.88%. Since the AR to sales is decreasing by -2.97% the stock passes this criterion.


"THE FOOL RATIO" (P/E TO GROWTH): PASS

The "Fool Ratio" is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (ASPS's is 0.26), the shares are looked upon favorably. These high quality companies can often wind up as the biggest winners. ASPS passes this test.

The following criteria for ASPS are less important which means you would place less emphasis on them when making your investment decision using this strategy:

AVERAGE SHARES OUTSTANDING: PASS

ASPS has not been significantly increasing the number of shares outstanding within recent years which is a good sign. ASPS currently has 20.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.


SALES: FAIL

Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. ASPS's sales of $1,037.5 million based on trailing 12 month sales, are too high and would therefore fail the test. It is companies with $500 million or less in sales that are most likely to double or triple in size in the next few years.


DAILY DOLLAR VOLUME: PASS

ASPS passes the Daily Dollar Volume (DDV of $18.3 million) test. It is required that this number be less than $25 million because these are the stocks that remain relatively undiscovered by institutions. "You'll be scoring touchdowns against the big guys on your turf."


PRICE: PASS

This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. ASPS with a price of $35.69 passes the price test, even though it doesn't fall in the preferred range. The price should be above $7 in order to eliminate penny stocks and below $20 since most stocks in this price range are undiscovered by the institutions.


INCOME TAX PERCENTAGE: FAIL

ASPS's income tax paid expressed as a percentage of pretax income either this year (6.91%) or last year (6.00%) is below 20% which is cause for concern. Because the tax rate is below 20% this could mean that the earnings that were reported are unrealistically inflated due to the lower level of income tax paid. However, we have utilized a sophisticated formula so that the appropriate figures reflect a 'normal' tax rate (35%).


LUMBER LIQUIDATORS HOLDINGS INC

Strategy: Value Investor
Based on: Benjamin Graham

Lumber Liquidators Holdings, Inc. (Lumber Liquidators) is a retailer of hardwood flooring, and hardwood flooring enhancements and accessories in North America. The Company's product categories include Solid and Engineered Hardwood; Laminate; Bamboo, Cork and Vinyl Plank, and Moldings and Accessories. The Company sells its products primarily to homeowners or to contractors on behalf of homeowners. The Company offers wood flooring under18 brand names, led by Bellawood, a collection of solid and engineered hardwood flooring, bamboo flooring, moldings and accessories. The Company also offers a range of flooring enhancements and installation accessories, including moldings, noise-reducing underlay and tools. It offers around 400 different flooring product stock-keeping units. As of February 23, 2015, Lumber Liquidators operated around 354 stores located in 46 states of the United States and nine store locations in Canada.


SECTOR: PASS

LL is neither a technology nor financial Company, and therefore this methodology is applicable.


SALES: PASS

The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. LL's sales of $1,015.9 million, based on trailing 12 month sales, pass this test.


CURRENT RATIO: PASS

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. LL's current ratio of 2.55 passes the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for LL is $0.0 million, while the net current assets are $205.1 million. LL passes this test.


LONG-TERM EPS GROWTH: PASS

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. LL's EPS growth over that period of 436.5% passes the EPS growth test.


P/E RATIO: PASS

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. LL's P/E of 5.00 (using the 3 year PE) passes this test.


PRICE/BOOK RATIO: PASS

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. LL's Price/Book ratio is 1.03, while the P/E is 5.00. LL passes the Price/Book test.


DRIL-QUIP, INC.

Strategy: Patient Investor
Based on: Warren Buffett

Dril-Quip, Inc. designs, manufactures, sells and services engineered offshore drilling and production equipment. The Company's equipment is suited for use in deepwater, harsh environments and service applications. The Company's operates in Western Hemisphere, including North and South America; Eastern Hemisphere, including Europe and Africa and Asia-Pacific, including the Pacific Rim, Southeast Asia, Australia, India and the Middle East. It products include subsea equipment, surface equipment and offshore rig equipment. Its products are used to explore for oil and gas from offshore drilling rigs, such as floating rigs and jack-up rigs, and for drilling and production of oil and gas wells on offshore platforms, TLPs, Spars and moored vessels, such as FPSOs. Its services include technical advisory assistance services, reconditioning of its customer-owned products, and rental of running tools for installation and retrieval of its products.

STAGE 1: "Is this a Buffett type company?"

A bedrock principle for Buffett is that his type of company has a "durable competitive advantage" as compared to being a "price competitive" or "commodity" type of business. Companies with a "durable competitive advantage" are more likely to be found in these sub-industries: Brand Name Fast Food Restaurants, Brand Name Beverages, Brand Name Foods, Brand Name Toiletries and Household Products, Brand Name Clothing, Brand Name Prescription Drugs, Advertising, Advertising Agencies, TV, Newspapers, Magazines, Direct Mail, Repetitive Services for Businesses, Low Cost Producers of Insurance, furniture, or Low Cost Retailers. While you should be easily able to explain where the company's pricing power comes from (i.e. a strong regional brand image, a business tollgate, its main products are #1 or # 2 in its field and has been on the market for years and hasn't changed at all, a consumer or business ends up buying the same product many times in a year, etc. or having the lowest production cost among its competition), there are certain figures that one can look at that can qualify the company as having a durable competitive advantage.


LOOK FOR EARNINGS PREDICTABILITY: PASS

Buffett likes companies to have solid, stable earnings that are continually expanding. This allows him to accurately predict future earnings. Annual earnings per share from earliest to most recent were 0.90, 2.15, 2.63, 2.62, 2.66, 2.55, 2.36, 2.94, 4.16, 5.19. Buffett would consider DRQ's earnings predictable, although earnings have declined 3 time(s) in the past seven years, with the most recent decline 4 years ago. The dips have totaled 12.0%. DRQ's long term historical EPS growth rate is 21.1%, based on the average of the 3, 4 and 5 year historical eps growth rates.


LOOK AT THE ABILITY TO PAY OFF DEBT PASS

Buffett likes companies that are conservatively financed. Nonetheless, he has invested in companies with large financing divisions and in firms with rather high levels of debt. DRQ has no long term debt and therefore would pass this criterion.


LOOK FOR CONSISTENTLY HIGHER THAN AVERAGE RETURN ON EQUITY: PASS

Buffett likes companies with above average return on equity of at least 15% or better, as this is an indicator that the company has a durable competitive advantage. US corporations have, on average, returned about 12% on equity over the last 30 years. The average ROE for DRQ, over the last ten years, is 14.4%. Although he prefers ROE to be 15% or higher, this level is acceptable to Buffett. It is not enough that the average be at least 15%. For each of the last 10 years, with the possible exception of the last fiscal year, the ROE must be at least 10% for Buffett to feel comfortable that the ROE is consistent. In addition, the average ROE over the last 3 years must also exceed 15%. The ROE for the last 10 years, from earliest to latest, is 10.5%, 18.6%, 18.1%, 18.3%, 15.0%, 12.3%, 10.3%, 11.2%, 13.7%, 16.2%, and the average ROE over the last 3 years is 13.7%, thus passing this criterion.


LOOK FOR CONSISTENTLY HIGHER THAN AVERAGE RETURN ON TOTAL CAPITAL: PASS

Because some companies can be financed with debt that is many times their equity, they can show a consistently high ROE, yet still be in unattractive price competitive businesses. To screen this out, for non-financial companies Buffett also requires that the average Return On Total Capital (ROTC) be at least 12% and consistent. In addition, the average ROTC over the last 3 years must also exceed 12%. Return On Total Capital is defined as the net earnings of the business divided by the total capital in the business, both equity and debt. The average ROTC for DRQ, over the last ten years, is 14.4% and the average ROTC over the past 3 years is 13.7%, which is high enough to pass. It is not enough that the average be at least 12%. For each of the last 10 years, with the possible exception of the last fiscal year, the ROTC must be at least 9% for Buffett to feel comfortable that the ROTC is consistent. The ROTC for the last 10 years, from earliest to latest, is 10.4%, 18.5%, 18.1%, 18.3%, 15.0%, 12.3%, 10.3%, 11.2%, 13.7%, 16.2%, thus passing this criterion.


LOOK AT CAPITAL EXPENDITURES: PASS

Buffett likes companies that do not have major capital expenditures. That is, he looks for companies that do not need to spend a ton of money on major upgrades of plant and equipment or on research and development to stay competitive. DRQ's free cash flow per share of $2.66 is positive, indicating that the company is generating more cash that it is consuming. This is a favorable sign, and so the company passes this criterion.


LOOK AT MANAGEMENT'S USE OF RETAINED EARNINGS: PASS

Buffett likes to see if management has spent retained earnings in a way that benefits shareholders. To figure this out, Buffett takes the total amount of retained earnings over the previous ten years of $28.16 and compares it to the gain in EPS over the same period of $4.29. DRQ's management has proven it can earn shareholders a 15.2% return on the earnings they kept. This return is more than acceptable to Buffett. Essentially, management is doing a great job putting the retained earnings to work.


HAS THE COMPANY BEEN BUYING BACK SHARES: BONUS PASS

Buffett likes to see falling shares outstanding, which indicates that the company has been repurchasing shares. This indicates that management has been using excess capital to increase shareholder value. DRQ's shares outstanding have fallen over the past five years from 40,040,001 to 39,000,000, thus passing this criterion. This is a bonus criterion and will not adversely affect the ability of a stock to pass the strategy as a whole if it is failed.

The preceding concludes Buffett's qualitative analysis. If and when he gets positive responses to all the above criteria, he would then proceed with a price analysis. The price analysis will determine whether or not the stock should be bought. The following is how he would evaluate DRQ quantitatively.

STAGE 2: "Should I buy at this price?" Although a firm may be a Buffett type company, he won't invest in it unless he can get a favorable price that allows him a great long term return.


CALCULATE THE INITIAL RATE OF RETURN: [No Pass/Fail]

Buffett compares his type of stocks to bonds, and likes to see what a company's initial rate of return is. To calculate the initial rate of return, take the trailing 12-month EPS of $5.20 and divide it by the current market price of $49.99. An investor, purchasing DRQ, could expect to receive a 10.40% initial rate of return. Furthermore, he or she could expect the rate to increase 21.1% per year, based on the average of the 3, 4 and 5 year historical eps growth rates, as this is how fast earnings are growing.


COMPARE THE INITIAL RATE OF RETURN WITH THE LONG-TERM TREASURY YIELD: PASS

Buffett favors companies in which the initial rate of return is around the long-term treasury yield. Nonetheless, he has invested in companies with low initial rates of return, as long as the yield is expected to expand rapidly. Currently, the long-term treasury yield is about 2.25%. Compare this with DRQ's initial yield of 10.40%, which will expand at an annual rate of 21.1%, based on the average of the 3, 4 and 5 year historical eps growth rates. The company is the better choice, as the initial rate of return is close to or above the long term bond yield and is expanding.


CALCULATE THE FUTURE EPS: [No Pass/Fail]

DRQ currently has a book value of $34.24. It is safe to say that if DRQ can preserve its average rate of return on equity of 13.7% and continues to retain 100.00% of its earnings, it will be able to sustain an earnings growth rate of 13.7% and it will have a book value of $123.52 in ten years. If it can still earn 13.7% on equity in ten years, then expected EPS will be $16.91.


CALCULATE THE FUTURE STOCK PRICE BASED ON THE AVERAGE ROE METHOD: [No Pass/Fail]

Now take the expected future EPS of $16.91 and multiply them by the lower of the 5 year average P/E ratio (23.4) or current P/E ratio (current P/E in this case), which is 9.6 and you get DRQ's projected future stock price of $162.51.


CALCULATE THE EXPECTED RATE OF RETURN BASED ON THE AVERAGE ROE METHOD: [No Pass/Fail]

Now add in the total expected dividend pool to be paid over the next ten years, which is $0.00. This gives you a total dollar amount of $162.51. These numbers indicate that one could expect to make a 12.5% average annual return on DRQ's stock at the present time. Although, the return is slightly below the liking of Buffett, the return would still be somewhat acceptable.


CALCULATE THE EXPECTED FUTURE STOCK PRICE BASED ON AVERAGE EPS GROWTH: [No Pass/Fail]

If you take the EPS growth of 21.1%, based on the average of the 3, 4 and 5 year historical eps growth rates, you can project EPS in ten years to be $35.41. Now multiply EPS in 10 years by the lower of the 5 year average P/E ratio (23.4) or current P/E ratio (current P/E in this case), which is 9.6. This equals the future stock price of $340.28. Add in the total expected dividend pool of $0.00 to get a total dollar amount of $340.28.


CALCULATE THE EXPECTED RETURN USING THE AVERAGE EPS GROWTH METHOD: [No Pass/Fail]

Now you can figure out your expected return based on a current price of $49.99 and the future expected stock price, including the dividend pool, of $340.28. If you were to invest in DRQ at this time, you could expect a 21.14% average annual return on your money. Buffett would consider this a great return.


LOOK AT THE RANGE OF EXPECTED RATE OF RETURN: PASS

Based on the two different methods, you could expect an annual compounding rate of return somewhere between 12.5% and 21.1%. To pinpoint the average return a little better, we have taken an average of the two different methods. Investors could expect an average return of 16.8% on DRQ stock for the next ten years, based on the current fundamentals. Buffett would consider this a great return, thus passing the criterion.


SANDERSON FARMS, INC.

Strategy: Value Investor
Based on: Benjamin Graham

Sanderson Farms, Inc. is a poultry processing company which is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared chicken items. In addition, the Company is engaged in the processing, marketing and distribution of prepared chicken through its wholly owned subsidiary, Sanderson Farms, Inc. (Foods Division). It produces a range of processed chicken products and prepared chicken items. It sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, under the Sanderson Farms brand name to retailers, distributors, and casual dining operators in the south-eastern, south-western, north-eastern and western United States and to customers who resell frozen chicken into export markets. During the fiscal year ended October 31, 2013 (fiscal 2013), it processed 452 million chickens, or over 3.0 billion dressed pounds.


SECTOR: PASS

SAFM is neither a technology nor financial Company, and therefore this methodology is applicable.


SALES: PASS

The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. SAFM's sales of $2,741.3 million, based on trailing 12 month sales, pass this test.


CURRENT RATIO: PASS

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. SAFM's current ratio of 4.31 passes the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for SAFM is $0.0 million, while the net current assets are $434.8 million. SAFM passes this test.


LONG-TERM EPS GROWTH: FAIL

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for SAFM were negative within the last 5 years and therefore the company fails this criterion.


P/E RATIO: PASS

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. SAFM's P/E of 12.40 (using the current PE) passes this test.


PRICE/BOOK RATIO: FAIL

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. SAFM's Price/Book ratio is 1.93, while the P/E is 12.40. SAFM fails the Price/Book test.


THOR INDUSTRIES, INC.

Strategy: Growth/Value Investor
Based on: James P. O'Shaughnessy

Thor Industries, Inc. (Thor), manufactures and sells various recreational vehicles (RV) throughout the United States and Canada, as well as related parts and accessories. The principal types of The Company's towable recreational vehicles that the Company produces include conventional travel trailers and fifth wheels. In addition, it also produces truck and folding campers and equestrian, and other specialty towable recreational vehicles, as well as Class A, Class C and Class B motorhomes. The Company operates through two segments: towable recreational vehicles and motorized recreational vehicles. The Company through its operating subsidiaries manufactures recreational vehicles in North America. The subsidiaries are Airstream, Inc., CrossRoads RV, Thor Motor Coach, Inc., Keystone RV Company, Heartland Recreational Vehicles, LLC, Livin' Lite RV, Inc., Bison Coach, K.Z., Inc. and Postle Operating, LLC.


MARKET CAP: PASS

The first requirement of the Cornerstone Growth Strategy is that the company has a market capitalization of at least $150 million. This will screen out the companies that are too illiquid for most investors, but still include a small growth company. THO, with a market cap of $2,902 million, passes this criterion.


EARNINGS PER SHARE PERSISTENCE: PASS

The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company's earnings must increase each year for a five year period. THO, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 1.66, 2.07, 2.86, 3.29 and 3.79, passes this test.


PRICE/SALES RATIO: PASS

The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. THO's Price/Sales ratio of 0.70, based on trailing 12 month sales, passes this criterion.


RELATIVE STRENGTH: FAIL

The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion. This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. THO has a relative strength of 60. This does not pass the final criterion. As a result, this methodology would not consider the stock even though it passed the previous three criteria.


ZUMIEZ INC.

Strategy: Value Investor
Based on: Benjamin Graham

Zumiez Inc. is a multi-channel specialty retailer of apparel, footwear, accessories and hardgoods. As of January 31, 2015, the Company operated 603 stores; 550 in the United States, 35 in Canada and 18 in Europe. The Company operates under the names Zumiez and Blue Tomato. Additionally, it operates e-commerce websites at www.zumiez.com and www.bluetomato.com. In apparel the Company offers t-shirts; baseball tees; hoodies and sweatshirts; tank tops; shorts; board shorts; joggers; shirts; jackets; jeans and pants; sweaters, and snow outerwear. The Company offers accessories, including hats, socks, watches, sunglasses, jewelry, backpacks, beanies, belts, wallets, underwear and bags. In addition it also offers cameras and tech; headphones; home; travel gear; hacky sacks; shoe laces; digital video discs (DVDs), scarves and gloves.


SECTOR: PASS

ZUMZ is neither a technology nor financial Company, and therefore this methodology is applicable.


SALES: PASS

The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. ZUMZ's sales of $820.3 million, based on trailing 12 month sales, pass this test.


CURRENT RATIO: PASS

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. ZUMZ's current ratio of 2.48 passes the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for ZUMZ is $0.0 million, while the net current assets are $131.5 million. ZUMZ passes this test.


LONG-TERM EPS GROWTH: PASS

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. ZUMZ's EPS growth over that period of 193.9% passes the EPS growth test.


P/E RATIO: FAIL

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. ZUMZ's P/E of 17.85 (using the current PE) fails this test.


PRICE/BOOK RATIO: FAIL

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. ZUMZ's Price/Book ratio is 1.85, while the P/E is 17.85. ZUMZ fails the Price/Book test.


OCEANEERING INTERNATIONAL

Strategy: Value Investor
Based on: Benjamin Graham

Oceaneering International, Inc. is an oilfield provider of engineered services and products to the offshore oil and gas industry, with a focus on deep water applications. The Company's business segments are contained within two businesses, such as services and products provided to the oil and gas industry (Oilfield) and all other services and products (Advanced Technologies). The Company's four business segments within the Oil and Gas business includes Remotely Operated Vehicles (ROVs), Subsea Products, Subsea Projects and Asset Integrity. The Company also provides remote asset management software services. The Company provides services and products, such as remotely operated vehicles, specialty subsea hardware, engineering and project management, subsea intervention services, including manned diving, and asset integrity and non-destructive testing services. The Company's foreign operations are principally focused in the North Sea, Africa, Brazil, Australia and Asia.


SECTOR: PASS

OII is neither a technology nor financial Company, and therefore this methodology is applicable.


SALES: PASS

The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. OII's sales of $3,062.8 million, based on trailing 12 month sales, pass this test.


CURRENT RATIO: PASS

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. OII's current ratio of 2.46 passes the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for OII is $795.8 million, while the net current assets are $901.5 million. OII passes this test.


LONG-TERM EPS GROWTH: PASS

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. OII's EPS growth over that period of 191.3% passes the EPS growth test.


P/E RATIO: PASS

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. OII's P/E of 11.22 (using the current PE) passes this test.


PRICE/BOOK RATIO: PASS

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. OII's Price/Book ratio is 1.62, while the P/E is 11.22. OII passes the Price/Book test.


FORUM ENERGY TECHNOLOGIES INC

Strategy: Value Investor
Based on: Benjamin Graham

Forum Energy Technologies, Inc. is an oilfield products company. The Company designs, manufactures and distributes products and engages in aftermarket services, parts supply and related services. Its product offering includes a mix of engineered capital products and replaced items that are used in the exploration, development, production and transportation of oil and natural gas. Its capital products are targeted at drilling rig equipment for rigs, upgrades and refurbishment projects; subsea construction and development projects; the placement of production equipment on producing wells, and downstream capital projects. Its engineered systems are components used on drilling rigs or in the course of subsea operations, while its consumable products are used to maintain operations at well sites in the well construction process, within the supporting infrastructure and at processing centers and refineries. Its segments are Drilling & Subsea and Production & Infrastructure.


SECTOR: PASS

FET is neither a technology nor financial Company, and therefore this methodology is applicable.


SALES: PASS

The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. FET's sales of $1,073.7 million, based on trailing 12 month sales, pass this test.


CURRENT RATIO: PASS

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. FET's current ratio of 4.78 passes the test.


LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for FET is $396.0 million, while the net current assets are $568.0 million. FET passes this test.


LONG-TERM EPS GROWTH: FAIL

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for FET were negative within the last 5 years and therefore the company fails this criterion.


P/E RATIO: FAIL

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. FET's P/E of 16.10 (using the 3 year PE) fails this test.


PRICE/BOOK RATIO: PASS

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. FET's Price/Book ratio is 0.72, while the P/E is 16.10. FET passes the Price/Book test.



Watch List

The top scoring stocks not currently in the Hot List portfolio.

Ticker Company Name Current
Score
FL FOOT LOCKER, INC. 84%
OXM OXFORD INDUSTRIES INC 77%
JBSS JOHN B. SANFILIPPO & SON, INC. 62%
AFSI AMTRUST FINANCIAL SERVICES INC 62%
WD WALKER & DUNLOP, INC. 58%
UFPI UNIVERSAL FOREST PRODUCTS, INC. 56%
FIT FITBIT INC 55%
IOSP INNOSPEC INC. 54%
SSL SASOL LIMITED (ADR) 52%
TBI TRUEBLUE INC 50%



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