A lot of investors tell me they're frustrated by all the recent stock market strength. Why? Because they got caught sitting on the sidelines and now feel as though it's too late to buy in.
While I'll be the first person to admit that many companies are no longer the screaming buys they used to be, I do want you to know that there are still plenty of reasonably-priced stocks out there right now. The trick is knowing how to find them.
As I've pointed out in this column many times before, stock screens are one of the quickest and easiest ways to start the process of searching for new buys.
In a minute I'll show you the results of my most recent screen.
First, However, Let's Recap How Stock Screens Work ...
Stock screeners are filtering programs that draw on databases of stored information, allowing you to search for investments based on pre-determined criteria. They're both extremely useful and fun to play with.
In the old days, it took a proprietary system and either lots of tedious labor or a very powerful computer to perform a single stock screen.
Now, things are a lot different. Sure, investment professionals still have access to programs and software that give them more information than most. But the Internet has brought screening to masses, and many of the online tools are as powerful as some of the pro-level stuff.
In fact, plenty of websites now offer advanced tools and rich data sources absolutely free of charge. For example, Yahoo! Finance has an interactive stock screener that encompasses more than 150 different criteria. I think it's very impressive, and worth checking out.
Other sites have quality screeners, too. Zacks Investment Research offers up a custom screener as does Morningstar, which includes the company's analyst rankings as one of the possible criteria. Morningstar also offers a premium screener, which is available by subscription only.
You should also check to see if your broker offers its own proprietary screening tools. Fidelity provides one to its customers, for example.
Okay, But What Criteria Should You Use?
Here's the Most Recent Search I Did ...
In the screen below, I limited my search to shares with dividend yields of 3.5% or higher — a bar that is much higher than the current market average.
Then to ensure that the dividends were reasonably safe I also insisted on a payout ratio of 65% or less. That means, in the worst case, one third of the firm's earnings are still being retained for basic business needs.
Next, I weeded out any stock that was trading at a price-to-earnings ratio in excess of 16. Moreover, I also screened for five-year earnings growth of at least 5%. Together this means the companies below are both reasonably priced and showing healthy business gains.
And to make sure that none of the resulting names were loaded down with debt, I added one final criteria — a long-term debt-to-equity ratio of 50% or less.
As you can see, many of the names are lesser-known regional banks, which makes sense given the combination of characteristics I searched for. However, there are also plenty of non-financials — including Strayer Education, food distributor Sysco, and tobacco company Lorillard.
Now, I'm not saying you should rush out and buy any of these companies — a stock screen is just the first step in the research process.
But I CAN tell you that I recently recommended one of the companies above for my own dad's retirement account. And I'm sure other names in this list are good buys right now, too.
So if you feel like it's too late to put some stocks into your portfolio, I'd humbly suggest you just look a little harder ... and stock screens are a great way to do that.
|< Prev||Next >|
Current Headlines - Finance
Volkswagen investors hope Piech exit may usher in change
Investors hope that Volkswagen will be able to revive profitability at its core division, cure underperformance overseas and bury lingering plans for acquisitions after the resignation of Chairman Ferdinand Piech. Piech, the mastermind of VW's global expansion and a towering figure at the German group for more than two decades, stepped down on Saturday after losing a showdown he had provoked with Chief Executive Martin Winterkorn. Almost 80 percent of VW investors expect the carmaker's stock market value to increase after Piech's departure as it may help unlock greater earnings potential at the 12-brand group, a survey by advisory firm Evercore ISI showed. The exit of Piech, who spearheaded VW's campaign to make everything from motorcycles to 40-tonne trucks and has publicly shown affection for Fiat Chrysler's Alfa Romeo brand, also curbs the risk of distracting purchases at a time when VW is seeking to cut billions of euros of costs at its core division, said Evercore ISI analyst Arndt Ellinghorst.
Stock futures up ahead of Apple earnings, Fed meeting later this week
US STOCKS-Futures up ahead of Apple earnings, Fed meeting later this week
U.S. stock index futures were up slightly on Monday after the Nasdaq Composite and S&P 500 chalked up record high closes on Friday and ahead of Apple's results after the close. * Investors this week will ...
Defense to begin arguments to spare Boston bomber's life
By Scott Malone BOSTON (Reuters) - The trial of the convicted Boston Marathon bomber enters a new and critical stage on Monday as defense lawyers begin to present their case that a jury should sentence Dzhokhar Tsarnaev to life in prison, rather than death. Tsarnaev, a 21-year-old ethnic Chechen, early this month was found guilty of killing three people and injuring 264 in one of the highest-profile attacks on U.S. soil since Sept. 11, 2001, as well as fatally shooting a police officer. Defense lawyers have countered that Tsarnaev, 19 at the time of the attack, was adrift and following the lead of his 26-year-old brother, Tamerlan, who died after a gunfight with police four days after the bombing.
Quake-aid need acute in Nepal capital, more so in villages
TopShop Store Card Group Banks On £1bn Sale
The finance group which provides credit cards to TopShop customers has hired bankers to prepare a sale or flotation that could value it at more than £1bn. The appointments signal an intention for Varde Partners, a hedge fund which acquired the company in 2011, to pursue an outright sale or stock market listing in the coming months. Last year, NewDay, which struck a five-year deal with Arcadia Group, the Dorothy Perkins-to-TopShop empire of Sir Philip Green, was relaunched by Varde after previously being known as SAV Credit. Two years ago, NewDay swallowed a retail co-brand card and point-of-sale finance business for high street retailers including Debenhams, Arcadia, House of Fraser and Laura Ashley, adding 3.4 million customer accounts and balances of £0.9bn.
Investors question Deutsche Bank's overhaul
Deutsche Bank's (DBKGn.DE) biggest strategic overhaul under co-chief executives Anshu Jain and Juergen Fitschen got a thumbs down from investors on Monday who judged it too little too late. Germany's flagship lender has trailed rivals under the tenure of Jain and Fitschen who despite the reverberations from the financial crisis stuck to an expensive universal banking model offering everything from mortgages in Germany to derivatives in London. Faced with tough regulations, weak markets and mounting legal bills from misconduct settlements, Deutsche is now following rivals such as UBS (UBSN.VX) and Barclays (BARC.L) in axing unprofitable business lines to boost earnings and shore up its balance sheet. After four months of deliberations, Jain and Fitschen have decided to cut up to 150 billion euros in investment bank assets, sell their Postbank (DPBGn.DE) retail division via a stock market listing by the end of 2016 and invest more in equities trading and wealth management.
Thousands expected at Monday's funeral for Freddie Gray
Lynch inherits civil rights probes from Holder as U.S. attorney general
By Richard Cowan WASHINGTON (Reuters) - A string of deadly confrontations between mostly white police and black men will be among challenges immediately facing Loretta Lynch when she is sworn in on Monday as U.S. attorney general. Lynch, 55, takes over as the country's top law enforcement official after a weekend that saw thousands of people in Baltimore, Maryland, take to the streets in mostly peaceful protests over the latest such case. Building on her career as an accomplished federal prosecutor, Lynch takes over from retiring Attorney General Eric Holder, who served more than six turbulent years at the head of the Justice Department. Besides the death of Freddie Gray in Baltimore, other questionable encounters between police and black males in recent months have led to unrest in South Carolina, Missouri, Ohio and New York.
Justice Ginsburg has already made up her mind on gay marriage
Ruth Bader Ginsburg, the 82-year-old leader of the Supreme Court’s minority liberal wing, has cast aside her usual restraint in the past months and left little doubt where she stands on the upcoming gay marriage case.