Instead I first use Yahoo’s stock screener to narrow down the stock universe to only companies that have strong financials (defined by my screening constraints like ROA, ROE, etc.). Usually this returns about 250 stocks.

Then I run a second screener of my own creation that scans these 250 companies to see which ones appear vastly undervalued (which may indeed be due to recent bad news). The output of this is normally about 4 stocks and I often already own them so I only occasionally find buys.

I have had good success with this in the last 4 years but we have been in a bull market this entire time. And according to Investor’s Business Daily, when the market is going up, 3 out of 4 stocks go up and vice versa.

So perhaps any somewhat logical strategy should give good results during a bull market.

All Best,
Lumilog

I usually invest in the so-called “Fallen Angels” – companies below their 52 week low – getting to this point because of some fraud or litigation and punished by Wall Street. If the company has solid business after a while it regains its normal price. Recently I more than doubled my investment buing BCGI 18 months ago and patiently waiting for the day of the triumph when they were acquired by some company from India. Today I picked LGND at almost 6 and expecting some 30% gain in six months. Can you tell me if this strategy is popular because it’s so simple and almost never fails ?(2 years ago I used ABB as a cash cow when they had to settle some asbestos process and were slapped by the mighty Wall)

Best Regards,
P.G.