How to Find
Big Cap Growth Stocks
The market, ignoring problems here and abroad, is on a
tear and showing no signs of slowing. If you want to participate;
in-favor, large-cap growth stocks are your best bet.
With that in mind, here’s a screen for finding profitable
large-caps that are in favor with stock analysts and the smart money
players.
Free Stock Screener
I’ll show you how to find them using the free and user
friendly
FINVIZ stock screener, although you could probably do the same thing
using your broker’s stock screener. If you’re unfamiliar with the term,
a stock screener is a program that you can use to search the entire
market for stocks meeting your particular requirements.
From the FINVIZ home page (finviz.com),
start by selecting screener, and then select “All”
on the Filters menu so that you can see the 65 selection filters that
FINVIZ offers to search out stocks meeting your requirements. From
there, use the associated dropdown menus to select values for the
filters that you want to use.
Set Up the Search
Start by selecting “Large” for Market Cap and “USA” for Country which
limits our list to U.S.-based firms with $10 billion or higher market
capitalizations (value of all outstanding shares).
Market Sentiment
Pinpoint “in favor” stocks first by selecting “Buy or Better” for
Analyst Recommendations. Then, use the Institutional Ownership filter,
which measures the percentage of outstanding shares held by mutual
funds, banks, and other big players. Anything over 40 percent represents
support by the smart money, but in this instance, select “over 70
percent” to insure maximum enthusiasm. Finally, in the enthusiasm
department, select “over 25 percent” for Next Five Years (average
annual) EPS Growth to limit the list to stocks with strong growth
expectations.
Fundamentals
Enthusiasm is great, but high debt loads can
trip up these high flyers. So, we’ll use the Debt/Equity filter to avoid
that risk. Debt/Equity compares total debt to shareholders equity (book
value). A zero D/E ratio signals no debt and the higher the ratio, the
higher the debt. Most firms carry some debt, so we shouldn’t be too
extreme here. Select “Under 0.4” for D/E.
Along those same lines, firms can report positive earnings, but still be
losing money when you count the cash. You can avoid such firms by
requiring positive cash flow. FINVIZ doesn’t offer a cash flow filter,
but you can assure that passing stocks are generating positive cash flow
by specifying “Over 5” for Price/Free Cash Flow. That number could only
be positive when cash flow is positive.
The List
My screen listed four stocks: Adobe Systems (ADBE), Facebook (FB), Palo
Alto Networks (PANW), and Salesforec.com (CRM). Click
here to see what the screen turns up today.
Consider the output of any screen, including this one, as research
candidates, not a buy list. The more you know about your stocks, the
better your results.
8/7/17 |
