Here is a couple of stocks that might be worth your attention this week. This is part 2 of 2.
This is not a sponsored content. I'm just sharing my thoughts with you, hoping you're going to enjoy it.
This short list was compiled with help of various sources of data, including Buy recommendations from several renowned stock data providers and analytical services. This is why I’m calling the approach a consensus strategy. The stocks I’m going to present you below are generally believed to outperform the stock market in the coming months, they have a consensus recommendation of Buy, their fundamentals are scored considerably better than most stocks and their average target price by stock analysts is above current market valuation.
In order to consider buying the stock’s shares, the following criteria need to be satisfied:
- TheStreet score: A+, A or A-
- Zacks Rank: 1 (Strong Buy), 2 (Buy) or 3 (Hold)
- Weiss Ratings recommendation: A or B
- Yahoo Finance recommendation: at least mixed Buy/Hold
- MarketBeat recommendation: at least mixed Buy/Hold
- Yahoo Finance target price: min. 5% higher than current price
- MarketBeat target price: min. 5% higher than current price
- Piotroski F-Score: min. 4
- Moody’s Daily Credit Risk: 1 to 6
- InvestorsObserver Overall Score: min. 50
Note: Descriptions of those criteria are provided at the end of this post.
If you decide to buy any of the below stocks, you might want to consider the following selling conditions (at least one of them should be satisfied):
- price is higher or close to target
- profit is in range 20% – 30%
- loss is higher than 50%
- TheStreet recommendation is changed to Sell
- Weiss Ratings recommendation is changed to Sell
- Yahoo Finance recommendation is changed to Sell
Let’s now take a look at the stocks I’ve identified with this strategy today.
FIRST AMERICAN FINANCIAL CP (FAF)
Sector: Finance
Industry: Specialty Insurance
Description: First American Financial Corp. operates as an insurance company. It provides title insurance and settlement services to the real estate and mortgage industries. The company operates its business through the following segments: Title Insurance & Services and Specialty Insurance. First American Financial was founded in January, 2008 and is headquartered in Santa Ana, CA.
Dividend: First American Financial pays an annual dividend of $1.84 per share, with a dividend yield of 2.69%. FAF’s most recent quarterly dividend payment was made to shareholders of record on Tuesday, June 15. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 7.32% each year. First American Financial pays out 33.76% of its earnings out as a dividend.
Current valuation: $64.85
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy/Hold
MarketBeat recommendation: Buy
Yahoo Finance target price: $74.8
MarketBeat target price: $73.00
Piotroski F-Score: 8
Moody’s Daily Credit Risk: 4
InvestorsObserver Overall Score: 52
Yahoo Finance 1 year change: 15.34%
FACEBOOK INC (FB)
Sector: Technology Services
Industry: Internet Software/Services
Description: Facebook, Inc. is focused on building products that enable people to connect and share through mobile devices, personal computers and other surfaces. The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus. Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. Instagram enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger allows communicating with people and businesses alike across a range of platforms and devices. WhatsApp Messenger is a messaging application that is used by people around the world and is available on a range of mobile platforms. Its Oculus virtual reality technology and content platform offers products that allow people to enter an interactive environment to play games, consume content and connect with others.
Dividend: NA
Current valuation: $360.33
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $386.47
MarketBeat target price: $402.76
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 1
InvestorsObserver Overall Score: 79
Yahoo Finance 1 year change: 7.33%
FEDERAL SIGNAL CORP (FSS)
Sector: Producer Manufacturing
Industry: Trucks/Construction/Farm Machinery
Description: Federal Signal Corp. engages in the designed manufacture of products and integrated solutions for municipal, governmental, industrial, and commercial customers. It operates through the Environmental Solutions Group and Safety and Security Systems Group segments. The company was founded in 1901 and is headquartered in Oak Brook, IL.
Dividend: Federal Signal pays an annual dividend of $0.36 per share, with a dividend yield of 0.90%. FSS’s next quarterly dividend payment will be made to shareholders of record on Wednesday, September 1. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 4.55% each year. Federal Signal pays out 21.56% of its earnings out as a dividend.
Current valuation: $39.81
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $45.33
MarketBeat target price: $44.00
Piotroski F-Score: 4
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 56
Yahoo Finance 1 year change: 13.87%
GAMING & LEISURE PPTYS (GLPI)
Sector: Finance
Industry: Real Estate Investment Trusts
Description: Gaming & Leisure Properties, Inc. is engaged in acquiring, financing, and owning real estate property to be leased to gaming operators in triple net lease arrangements. It operates through the GLP Capital and TRS Properties segments. The GLP Capital segment consists of the leased real property and represents the majority of business. The TRS Properties segment includes Hollywood Casino Perryville and Hollywood Casino Baton Rouge. The company was founded on February 13, 2013 and is headquartered in Wyomissing, PA.
Dividend: Gaming and Leisure Properties pays an annual dividend of $2.68 per share, with a dividend yield of 5.56%. GLPI’s most recent quarterly dividend payment was made to shareholders of record on Friday, June 25. Gaming and Leisure Properties pays out 77.68% of its earnings out as a dividend.
Current valuation: $47.86
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy/Hold
MarketBeat recommendation: Buy
Yahoo Finance target price: $51.08
MarketBeat target price: $50.25
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 4
InvestorsObserver Overall Score: 60
Yahoo Finance 1 year change: 6.73%
HAWKINS INC (HWKN)
Sector: Distribution Services
Industry: Wholesale Distributors
Description: Hawkins, Inc. engaged in the distribution, blending, and manufacture of chemicals and specialty ingredients for a wide variety of industries. It operates through the following segments: Industrial, Water Treatment, and Health and Nutrition. The company was founded by Howard Hawkins in 1938 and is headquartered in Roseville, MN.
Dividend: Hawkins pays an annual dividend of $0.49 per share, with a dividend yield of 1.33%. HWKN’s next quarterly dividend payment will be made to shareholders of record on Friday, August 27. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 2.64% each year. Hawkins pays out 25.39% of its earnings out as a dividend.
Current valuation: $36.80
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $44.0
MarketBeat target price: $44.00
Piotroski F-Score: 8
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 51
Yahoo Finance 1 year change: 137.84%
ICON PLC (ICLR)
Sector: Health Technology
Industry: Pharmaceuticals: Other
Description: ICON plc operates as a clinical research organization, which engages in the provision of outsourced development services to the pharmaceutical, biotechnology, and medical device industries. It specializes in the strategic development, management and analysis of programs that support clinical development. The company was founded by John Climax and Ronan Lambe in June 1990 and is headquartered in Dublin, Ireland.
Dividend: NA
Current valuation: $235.92
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $251.42
MarketBeat target price: $251.00
Piotroski F-Score: 6
Moody’s Daily Credit Risk: 2
InvestorsObserver Overall Score: 80
Yahoo Finance 1 year change: 6.57%
IDEX CORP (IEX)
Sector: Finance
Industry: Investment Banks/Brokers
Description: Indian Energy Exchange Ltd. Engages in power exchange business and provides an automated platform for trading of electricity and related products. It enables trading and price discovery of electricity and related products with risk management for participants of the electricity market. The firm’s products include day-ahead-market (DAM) electricity contracts, term-ahead-market (TAM) electricity contract, Renewable Energy Certificates (REC) and Energy Saving Certificates. The company was founded on March 26, 2007 and is headquartered in Noida, India.
Dividend: IDEX pays an annual dividend of $2.16 per share, with a dividend yield of 0.95%. IEX’s most recent quarterly dividend payment was made to shareholders of record on Friday, July 30. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 11.31% each year. IDEX pays out 41.62% of its earnings out as a dividend.
Current valuation: $227.11
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy/Hold
MarketBeat recommendation: Buy
Yahoo Finance target price: $242.25
MarketBeat target price: $239.50
Piotroski F-Score: 5
Moody’s Daily Credit Risk: 2
InvestorsObserver Overall Score: 69
Yahoo Finance 1 year change: 6.61%
JOHNSON & JOHNSON (JNJ)
Sector: Health Technology
Industry: Pharmaceuticals: Major
Description: Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices. Its primary focus is products related to human health and well-being. Its research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom.
Dividend: Johnson & Johnson pays an annual dividend of $4.24 per share, with a dividend yield of 2.44%. JNJ’s next quarterly dividend payment will be made to shareholders of record on Tuesday, September 7. The company has grown its dividend for the last 59 consecutive years and is increasing its dividend by an average of 6.23% each year. Johnson & Johnson pays out 52.80% of its earnings out as a dividend.
Current valuation: $173.82
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $187.39
MarketBeat target price: $190.38
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 1
InvestorsObserver Overall Score: 62
Yahoo Finance 1 year change: 7.81%
LAM RESEARCH CORP (LRCX)
Sector: Electronic Technology
Industry: Electronic Production Equipment
Description: Lam Research Corp. engages in manufacturing and servicing of wafer processing semiconductor manufacturing equipment. It operates through the following geographical segments: the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan. It offers thin film deposition, plasma etch, photoresist strip, and wafer cleaning. The company was founded by David Lam on January 21, 1980 and is headquartered in Fremont, CA.
Dividend: Lam Research pays an annual dividend of $5.20 per share, with a dividend yield of 0.86%. LRCX’s most recent quarterly dividend payment was made to shareholders of record on Wednesday, July 7. The company has grown its dividend for the last 3 consecutive years and is increasing its dividend by an average of 38.36% each year. Lam Research pays out 19.09% of its earnings out as a dividend.
Current valuation: $599.8
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $728.43
MarketBeat target price: $713.94
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 65
Yahoo Finance 1 year change: 21.45%
MONDELEZ INTERNATIONAL INC (MDLZ)
Sector: Consumer Non-Durables
Industry: Food: Major Diversified
Description: Mondelez International, Inc. engages in the manufacture and marketing of snack food and beverage products. It operates through the following geographical segments: Latin America; Asia, Middle East, and Africa; Europe; and North America. Its products include beverages, biscuits, chocolate, gum & candy, cheese & grocery and meals. Its brands include but not limited to Nabisco, Oreo, and LU biscuits; Cadbury, Cadbury Dairy Milk, and Milka chocolates; and Trident gum. The company was founded by James Lewis Kraft in 1903 is headquartered in Chicago, IL.
Dividend: Mondelez International pays an annual dividend of $1.26 per share, with a dividend yield of 2.01%. MDLZ’s next quarterly dividend payment will be made to shareholders of record on Thursday, October 14. The company has grown its dividend for the last 8 consecutive years and is increasing its dividend by an average of 13.53% each year. Mondelez International pays out 48.65% of its earnings out as a dividend.
Current valuation: $62.59
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $69.17
MarketBeat target price: $67.90
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 1
InvestorsObserver Overall Score: 68
Yahoo Finance 1 year change: 10.51%
OPEN TEXT CORP (OTEX)
Sector: Technology Services
Industry: Packaged Software
Description: Open Text Corp. engages in the design, development, marketing and sales of enterprise information management software and solutions. It includes customer experience management (CEM), digital process automation, business network, and enterprise content management, discovery, security, and artificial intelligence (AI) and analytics solutions. It also offers consulting, managed, and learning services. The company was founded on June 26, 1991 and is headquartered in Waterloo, Canada.
Dividend: Open Text pays an annual dividend of $0.38 per share, with a dividend yield of 0.72%. OTEX’s next quarterly dividend payment will be made to shareholders of record on Friday, September 24. The company has grown its dividend for the last 7 consecutive years and is increasing its dividend by an average of 12.35% each year. Open Text pays out 13.57% of its earnings out as a dividend.
Current valuation: $52.62
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Hold
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $56.95
MarketBeat target price: $60.00
Piotroski F-Score: 6
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 57
Yahoo Finance 1 year change: 8.23%
QUALCOMM INC (QCOM)
Sector: Electronic Technology
Industry: Telecommunications Equipment
Description: QUALCOMM, Inc. engages in the development, design, and provision of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI). The company was founded by Franklin P. Antonio, Adelia A. Coffman, Andrew Cohen, Klein Gilhousen, Irwin Mark Jacobs, Andrew J. Viterbi, and Harvey P. White in July 1985 and is headquartered in San Diego, CA.
Dividend: QUALCOMM pays an annual dividend of $2.72 per share, with a dividend yield of 1.87%. QCOM’s next quarterly dividend payment will be made to shareholders of record on Thursday, September 23. The company has grown its dividend for the last 1 consecutive years and is increasing its dividend by an average of 4.69% each year. QUALCOMM pays out 81.44% of its earnings out as a dividend.
Current valuation: $145.03
Valuation of entry parameters:
TheStreet score: A
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $171.44
MarketBeat target price: $167.54
Piotroski F-Score: 7
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 70
Yahoo Finance 1 year change: 18.21%
QORVO INC (QRVO)
Sector: Electronic Technology
Industry: Semiconductors
Description: Qorvo, Inc. engages in the provision of development and commercialization of technologies and products for wireless and wired connectivity. It operates through the following reportable segments: Mobile Products and Infrastructure & Defense Products. The firm’s products include amplifiers, control products, discrete transistors, filters & duplexers, frequency converters & sources, integrated products, optical components, passives, power management products, switches, and wireless connectivity products. The company was founded on December 13, 2013 and is headquartered in Greensboro, NC.
Dividend: NA
Current valuation: $188.32
Valuation of entry parameters:
TheStreet score: A-
Zacks Rank: Buy
Weiss Ratings recommendation: Buy
Yahoo Finance recommendation: Buy
MarketBeat recommendation: Buy
Yahoo Finance target price: $208.26
MarketBeat target price: $205.14
Piotroski F-Score: 8
Moody’s Daily Credit Risk: 6
InvestorsObserver Overall Score: 74
Yahoo Finance 1 year change: 10.59%
Now, a few words on the criteria I’m using and sources of data.
1. TheStreet score
The first filtering step is to get stocks with Buy recommendation at TheStreet stock screener. I’m only keeping stocks with A+, A or A- rating (top ones), although A-, B+, B and B- are Buys as well.
From thestreet.com:
A (Excellent) – The stock has an excellent track record for maximizing performance while minimizing risk, thus delivering the best possible combination of total return on investment and reduced volatility. It has made the most of the recent economic environment to maximize risk-adjusted returns compared to other stocks. While past performance is just an indication — not a guarantee — we believe this fund is among the most likely to deliver superior performance relative to risk in the future as well.
And about the methodology:
TheStreet Ratings’ stock model projects a stock’s total return potential over a 12-month period including both price appreciation and dividends*. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both* subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows.
2. Zacks Rank
It is required that the Zacks Rank is Hold, Buy or Strong Buy (so we’re avoiding stocks with Sell and Strong Sell recommendations). The Zacks Rating utilizes a completely different system, based on company earnings-related data, in particular earnings estimate revisions and earnings surprises, to predict profitability of holding the company’s shares.
3. Weiss Ratings recommendation
We’re only keeping stocks with Buy (B) or Strong Buy (A) recommendation.
Wjat are these scores? This is what I found at their website:
“A” Rating: Excellent. The company’s stock has an excellent track record for providing strong performance with lower-than-average risk, and it is trading at a price that represents good value relative to the company’s earnings prospects. While past performance is no guarantee of future results, our opinion is that this stock is among the most likely to deliver superior performance relative to risk in the future. Of course, even the best stocks can decline in a down market. But our “A” rating can generally be considered the equivalent of a “Strong Buy“.
“B” rating: Good. The company’s stock has a good track record for delivering a balance of performance and risk. While the risk-adjusted performance of any stock is subject to change, our opinion is that this stock is a good value, with good prospects for outperforming the market. Although even good investments can decline in a down market, our “B” rating is considered the equivalent of a “Buy“.
4. Yahoo Finance recommendation and target price
It is required that the Yahoo Finance stock recommendation is at least mixed Buy/Hold from experts. Additionally, the predicted target price (average, from experts) should be at least 5% higher than the current one.
5. MarketBeat recommendation and taget price
Similar to Yahoo Finance, it is required that the MarketBeat stock recommendation is at least mixed Buy/Hold. Additionally, the predicted target price (average, from experts) should be at least 5% higher than the current valuation.
6. Piotroski F-Score
The Piotroski score is a number between 0-9 that reflects nine criteria used to determine the strength of a company’s financial situation, including profitability, leverage or operating efficiency. Zero is the worst value and nine is the best. As we can read in Piotroski's paper from 2000:
In addition, an investment strategy that buys expected winners and shorts expected losers generates a 23% annual return between 1976 and 1996, and the strategy appears to be robust across time and to controls for alternative investment strategies.
It is required that the score is 4 or higher. The values were retrieved from gurufocus website.
7. Moody’s Daily Credit Risk
Moody’s Daily Credit Risk Score is a 1-10 score, which provides a forward-looking, one-year measure of credit risk. It is updated daily and takes into account day-to-day market movements compared to a company’s liabilities.
The value is retrieved from Business Insider's website and is expected to be in the range of 1-6.
8. InvestorsObserver Overall Score
The rank has a value in between 0 and 100. It takes into account both technical analysis and fundamental stock data. An Overall Rank of N means that a given company is rated above N% of stocks, therefore the higher the number, the better. My requirement is that the company has InvestorsObserver Overall score of at least 50. From their website:
The Overall Score combines our two technical scores (Short Term and Long Term) with our Fundamental Score into one metric. This makes our overall score a great place to start when evaluating stocks, regardless of your investing style.
A low score doesn’t necessarily mean a stock is likely to go down, just that our system doesn’t think there’s much of a bullish case for it.
Please note that the company profile data (short description) was taken from tradingview website (sometimes I shortened it) and dividend data was retrieved from MarketBeat.
I hope you enjoyed the reading. What do you think about this stock selection and the strategy? Feel free to leave a comment below.
Michael
Disclosures:
- What you see here is my personal opinion, my own investments and should not be treated as investing advice
- I’m an amateur investor
Submitted August 12, 2021 at 03:51AM by investing-scientist2 https://ift.tt/3lWibIH
