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
Dozens injured as bus filled with college students overturns in Virginia
The bus, carrying some 50 people, most of them students, from Richmond back to Virginia Tech, Radford University and the University of Virginia, flipped onto its side on the Powhite Parkway near Chesterfield, media reported, citing State Police and emergency responders. The Virginia State Police could not be reached to verify the reports' details.
Perfection denied as Broncos beat Patriots in an overtime thriller
Earth is a wilder, warmer place since last climate deal made
Iraq War vet, mother of 2 slain in Planned Parenthood shooting
Planned Parenthood says Colorado shooter opposed abortion
By Keith Coffman COLORADO SPRINGS, Colo. (Reuters) - Planned Parenthood said on Sunday that news reports that the gunman who attacked its Colorado health clinic had uttered "no more baby parts" during his arrest showed the suspect was motivated by an anti-abortion agenda. The remark attributed to suspect Robert Lewis Dear was an apparent reference to Planned Parenthood's abortion activities and its role in delivering fetal tissue to medical researchers, a hot-button issue in the 2016 race for the presidency. "We now know the man responsible for the tragic shooting at PP's health center in Colorado was motivated by opposition to safe and legal abortion," the organization said on Twitter.
MIDEAST STOCKS-Egypt rises as new c.bank chief arrives; Gulf sluggish
* Hopes that new Egypt c.bank head can resolve FX crisis * Shares in port services companies rise * Saudi cement firms up on hopes for export liberalisation * UAE's Dana Gas soars on arbitration award in Kurdistan * Real estate-related stocks soft in Dubai By Andrew Torchia DUBAI, Nov 29 (Reuters) - Egypt's stock market rose on Sunday as a new central bank governor took office, increasing hopes that the country's foreign exchange crisis can be resolved, while bourses in the Gulf were mostly sluggish. Tarek Amer, a well-regarded former commercial banker, was to head the first meeting of the Egyptian central bank's new board on Sunday. Many people expect him to work with the government to try to end a foreign currency shortage by regulating imports and supporting exports, which could benefit many listed firms.
MIDEAST STOCKS-Egypt rises as new central bank chief arrives; Saudi firm
Egypt's stock market rose early on Sunday as a new central bank governor took office, increasing hopes that the country's foreign exchange crisis can be resolved, while the Saudi market was firm. Tarek Amer, a well-regarded former commercial banker, was to head the first meeting of the central bank's new board on Sunday. Many people expect him to work with the government to try to end the foreign currency shortage by regulating imports and supporting exports, which could benefit many listed firms.
Murdoch: Tribune papers likely to be sold, LA Times split off
Rupert Murdoch, co-chairman of Wall Street Journal publisher News Corp , on Friday said he had "strong word" that the Tribune Publishing Co's newspaper group will be bought by a Wall Street firm, while the Los Angeles Times will be split off and purchased by local investors including philanthropist Eli Broad. Murdoch, who is also co-chairman of 21st Century Fox , the entertainment and broadcast group, made his comments on Twitter. In September Tribune's board said the Los Angeles Times and San Diego Union-Tribune were "a cornerstone of our company's portfolio and a key component to our success in the future." Murdoch did not say on his verified Twitter account which firm would acquire the newspaper group or the timing of any deal.
TSX retreats on slide in resource stocks
By Fergal Smith TORONTO (Reuters) - Canada's main stock index closed lower on Friday, driven by weakness in resource shares after a plunge in China equities weighed on commodity prices. Trading was thin, with Wall Street closing early following Thursday's holiday. "It's commodities again, generally, that are hurting the Toronto market and they will continue to do so until their prices bottom," said Norman Levine, managing director at Portfolio Management Corp. The energy sector fell 1.4 percent, pressured by a 3 percent tumble in U.S. crude oil prices. Canadian Natural Resources Ltd fell 2. ...
Wall Street ends flat; Disney, retailers dip on sales worries
U.S. stock indexes ended little changed in light trading on Friday, with consumer stocks falling as investors fretted over early reports on the U.S. holiday shopping season and Disney's subscriber losses weighed on the market. U.S. stock markets closed three hours earlier following the Thanksgiving holiday on Thursday, with many traders taking the day off. "We're going to get today over with and hit the ground running next week," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.