The stock market has been red hot. How long that
lasts is anybody’s guess.
But in the meantime, you’ll do best sticking with
what’s working now; specifically uptrending, in-favor stocks with
strong growth prospects.
Here’s how you can use the free finviz stock screener
to find such stocks. If you’re not familiar with the term, stock
screeners are programs that allow you to scan the entire market for
stocks meeting your selection criteria. I’m partial to the finviz
screener because it’s user friendly and offers a lot of screening
choices.
First, I’ll describe how to set up finviz and then
I’ll list the stocks that my screen turned up last Wednesday.
From the finviz homepage (https:finviz.com),
select Screener and then “All” to see the available search filters.
Then, use the associated dropdown menus to select screening values
for the filters that you want to use.
Since the U.S. currently enjoys a strong economy,
start by using the Country filter to limit your list to U.S.-based
stocks.
Make the Trend Your Friend
Currently strong stocks are your best bets for future
gains. Moving averages reflect a stock’s average closing prices over
a specified timeframe. Stocks are said to be uptrending when
they’re trading above their moving average, which is what you want.
So, use the moving average indicators to find them: the 200-day MA
to check relatively long-term (40 weeks) price action and the 50-day
MA for shorter term (10 week) performance. Thus, select both the 50-
and 200-day “Simple Moving Average” filters and specify “Price Above
SMA” for each.
Tracking the In Crowd
Insiders are company executives, board members, and
big shareholders. Us the “Insider Transactions” filter to specify
“Over +10%” to limit your list to stocks that these folks in a
position to know what’s next have been buying, not selling.
Follow the Money
Institutional buyers such as mutual funds and hedge
funds have access to information that we never see. If they don’t
own a stock, neither should you. Specify “Over 40%” for
“Institutional Ownership,” which is the percentage of outstanding
shares owned by these wired-in players. Also, specify “Positive” for
“Institutional Transactions” to limit your list to stocks that
they’ve been recently buying.
Analysts Should Know
Stock analysts spend their days trying to deduce what
happens next to stocks they follow. Specify “Buy or Better” for
“Analyst Recommendation” to take advantage of their efforts.
Short Sellers Not?
Short sellers profit when prices of the stocks
they’ve shorted go down instead of up. Major short-selling can be
your first clue that something is amiss. Specify “Low” for “Float
Short” which is the percentage of shares that have been shorted, to
avoid heavily shorted stocks.
Two More Checks
Stock prices track earnings per share (EPS) more than
any other factor. Specify “Over 10%” for “EPS Growth Next Year” to
confine your list to the best prospects from that angle.
Some investors believe that cheap stocks have more
profit potential than higher priced stocks. But the opposite is
true. Specify “Over $20” for “Price” to cut your risk of picking bad
stocks.
And the Winners Are
My screen turned up four stocks: Emerson Electric
(EMR), Greif (GEF), TravelCenters of America (TA) and
Upwork (UPWK). Click
here to see which stocks the screen is turning up today.
Consider the stocks found by any screen to be
research candidates, not a buy list. The more you know about your
stocks, the better your results.
published 12/8/20
