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Screening Strategies

UK Data
67 strategies sorted by
Winning Growth & Income

This is a dividend-focused strategy loosely on the "Growth & Income Winners" screen outlined by Kevin Matras in his book, entitled Finding #1 Stocks. The approach starts out looking for solid growth parameters then drills down to the best dividend payers of the group. In Matras' version, however, the primary filter is the US-focused Zacks Rank (a proprietary metric analysing analyst forecasts for i) Agreement, ii) Magnitude, iii) Upside Potential, Surprise). However, we simplify this to just look for a positive change in analyst forecasts over the last quarter instead. Matras envisages selecting the top 7 by dividend yield, but with no more than 2 in each sector - although it's hard to find 7 such stocks qualifying on the UK market. We take the top 14 but suggest you review the resultant list with sector diversification in mind. more »

Income Investing
6 Month Return: 4.4%
Naked Trader-esque Screen

This is a mixed-criteria GARP screen inspired by the enjoyable best-seller by Robbie Burns, "The Naked Trader: How Anyone Can Make Money Trading Shares". His approach is primarily value / fundamentals driven: "My investment strategy has always been quite simple: find excellent companies and hold them until the value comes out". While he does appear to use a fair amount of technical analysis in order to time the entry, he appears sceptical about pure TA: "I strongly believe charts are very important to look at.. but I also believe it is simply crazy to buy and sell shares on the basis of looking at a chart and nothing else at all". more »

Growth Investing
6 Month Return: 4.3%
52 Week High Momentum Screen

An investing screen based on buying stocks that are close to their 52 week high (and/or selling stocks that are close to their 52 week lows). Similar to other forms of momentum investing, this seems to work because investors tend to under-react to positive (or negative) information about those kinds of stocks. Researchers surmise that investors use the 52- week high as an “anchor” against which they value stocks, thus they tend to be reluctant to buy a stock as it nears this point regardless of new positive information. As a result, investors underreact when stock prices approach the 52-week high, and consequently, contrary to most investors' expectations, stocks near their 52-week highs tend to be systematically undervalued.  Finally, when information prevails and the 52 week high is broken, the market “wakes up” and prices see excess gains.   You can read more here. more »

Momentum Investing
6 Month Return: 4.1%
Free Cash Flow Cows Screen

This screen is inspired by a similar screen devised and backtested here by the Old School Value blog for the US market. It looks for stable, cash rich companies growing their FCF, yet selling at a cheap multiple to FCF. Free cash flow is defined as cash from operations minus capital expenditure. The idea is that FCF is the ultimate driver of intrinsic value - the more FCF a company can generate and reduce debt, the higher the intrinsic value of the company becomes. more »

Bargain Stocks
6 Month Return: 3.0%
The Screen of Screens

This is a screen that picks the stocks that are appearing most frequently across all the other screens tracked on Stockopedia - be they value, bargain, growth, quality, income or momentum (excluding short screens). By definition, this tends to be a list of relatively defensive stocks because they exhibit good fundamentals across a wide range of investing strategies. This strategy is especially interesting as the stocks on this list will by definition be being looked at by a broad range of investors - value, growth, income, momentum, quant. more »

Quality Investing
6 Month Return: 1.9%
James O'Shaugnessy's Cornerstone Value

Cornerstone Value is a five criteria large-cap dividend yield-focused value screen outlined in James O'Shaughnessy’s seminal 1996 book What Works on Wall Street. His work showed that a large-caps stock portfolio with above average stock liquidity and cash flow per share which was ranked for high dividend yields performed best over the long term. Accordiing to his work, this value strategy outperformed the market producing an annual compound return of 15% from 1954 to 1996, compared to 8.3% for the S&P 500 Index (his Cornerstone Growth Strategy achieved 18% but with greater volatility). more »

Value Investing
6 Month Return: 1.5%
Josef Lakonishok Screen

A value and momentum screen focused on finding under-valued, out-of-favor companies just at the point when the market is starting to recognise them. According to Lakonishok, investors have judgmental biases and behavioral weaknesses including the tendency to extrapolate the past too far into the future, to wrongly equate a good company with a good investment irrespective of price, to ignore statistical evidence and to develop a "mindset" about a company. As a result, "value stocks become underpriced and glamour stocks become overpriced relative to their fundamentals".  This screen looks for: At least one of Price-to-book, price-to-cash-flow, price-earnings or price-to-sales ratios more favourable than the industry  6 Month relative strength above zero  3 month relative strength above zero EPS Surprise or a trending revision in the analyst consensus more »

Momentum Investing
6 Month Return: 1.4%
Charles Kirkpatrick Value Screen

Kirkpatrick’s Value Screen combines quantitative filters for relative price strength and relative reported earnings growth, with a value criterion - using relative price-to-sales percentiles, Kirkpatrick arbitrarily selected only those stocks in the 30th percentile or lower. Despite the success of his Growth Model, Kirkpatrick was concerned about the fact that its performance had occurred during one of the strongest bull markets in history. He wanted to strengthen the system against capital loss to protect against the inevitable market reversal. He believed relative price strength would not be effective during a market downturn and could lead to significant capital losses. For Kirkpatrick, the alternative was to reduce the risk of the portfolio by beginning with a group of stocks with low valuations. Kirkpatrick also looks for growth companies with market capitalizations of at least $500 million and share prices of at least $10. You can read more here. more »

Value Investing
6 Month Return: 1.4%
Richard Beddard's Nifty Thrifty Screen

A combined value screen developed by Richard Beddard, editor of leading UK finance site, Interactive Investor. It selects 30 UK-listed companies (with a market value of more than £500 million), using an approach that assesses three key criteria: i) value, as measured by the earnings yield; ii) profitability, measured by return on capital; and iii) financial strength, as measured by Piotroski’s F-Score. Essentially Piotroski plus the Magic Formula. This screen is not to be confused with the Thrifty Thirty, which is Beddard's own stock picks, as described on the Interactive Investor Blog.   more »

Value Investing
6 Month Return: 1.1%
Buffettology-esque Sustainable Growth Screen

This screen seeks to replicate the approach of Warren Buffett,   arguably the most successful living investor - based on the summary/interpretation by Mary Buffett (a former daughter-in-law) in the best-selling book, "The New Buffettology".  In Chapter 13, Mary Buffett outlines a number of screening-type criteria entitled "Warren's Checklist for Potential Investments: His Ten Points of Light", which we summarise out below. Not all of these points are quantitative in nature, admittedly, but there's certainly the beginnings of a good Buffett screen, and one with a slightly different emphasis to that of the Buffett-Hagstrom screen. This version uses the Sustainable Growth method to calculate the "expected return". more »

Quality Investing
6 Month Return: 0.9%
Best Dividends Screen

This is loosely based on AAII's Dividend (High Dividend Yield) Screen. As they note, screening for relative high dividend yield is essentially all about buying low and selling high but, to succeed at this strategy, it's important also to identify which which high yielding stocks have the strength to bounce back. The screen looks for a consistent dividend payment and dividend growth track record, as well as   a payout ratio below 2/3rds, a dividend growth CAGR above 3% and a yield above the historical average.. more »

Income Investing
6 Month Return: 0.5%
Bill Miller Contrarian Value Screen

This screen seeks to emulate the style of Bill Miller, manager of Legg Mason Value Trust. Miller’s strategy focuses on identifying securities that are trading below their intrinsic value, but differs from many value managers in that he focuses on cash earnings, not accounting earnings. He looks for firms that may be undervalued based on the present value of future cashflows, although this is not easy to screen for in detail. He says: "Ideally, what we want is a company... that has tremendous long-term economics and those economics are either currently obscured by macroeconomic factors, industry factors, company-specific factors, or just the immaturity of the business." Diversification is a crucial element in Miller’s strategy but he aims for diversification among the stocks it incorporates, rather than the sheer quantity. By focusing on companies that are being shunned by the market, this strategy takes on higher risks in hope of higher returns. The value moniker for his Fund is perhaps misleading because Miller has bought many Internet “growth” stocks. You can read more about Miller's approach here. more »

Value Investing
6 Month Return: 0.5%
Benjamin Graham NCAV Bargain Screen

This is a deep value screen based on Ben Graham's writings. It is a simplistic screen which just looks for stocks where the market cap is less than net current asset value. It is not to be confused with his more involved Enterprising Investor and Defensive Investor criteria which have been modelled separately. As a reminder, NCAV = Current Assets - Total Liabilities. That's a stringent requirement, since most companies have negative NCAVs but Graham was looking for firms trading so cheap that there was little danger of falling further. In addition, Graham would have requested a margin of safety of at least 33%, so his P/NCAV threshold would have been 0.66. Graham argued such companies were typically priced at significant discounts to the likely value that stockholders could receive in an actual sale or liquidation of the entire corporation. Because of the kind of unloved/troubled companies it generates, this is not a strategy for the faint-hearted. Graham sought safety from individual bankruptcy risk by diversifying his portfolio with a large numbers of companies – he suggested 30.   more »

Bargain Stocks
6 Month Return: 0.2%
Benjamin Graham Deep Value Checklist

Towards the end of his life, Benjamin Graham developed a flexible checklist based formula that allowed investors to build portfolios of deep value stocks large or small. It was developed with aeronautical engineer, James Rea, shortly before he died. It's become known as "Graham's Last Will" and was the result of 50 years of backtests to highlight the top ten best performing stock selection criteria. more »

6 Month Return: 0.0%
Charles Kirkpatrick Bargain Screen

Kirkpatrick’s Bargain Screen combines the best triggers found in his testing of relative value, relative reported earnings growth. Kirkpatrick's testing of relative price-to-sales ratio percentile rankings indicated optimal performance in percentiles greater than 17 but not higher than the 42nd percentile. For relative strength, he found that setting the bar at the 90th percentile resulted in too many passing companies to manage in a portfolio. To reduce the number of passing companies to just 20, Kirkpatrick upped the requirement to only include companies in the 97th percentile or higher. Initial testing of the Bargain Model was promising but Kirkpatrick conceded that several more years of testing were needed before labeling it a successful stock selection methodology. You can read more here. more »

Bargain Stocks
6 Month Return: -0.6%
John Templeton Bargain Screen

John Templeton believed that there were no simple formulae to finding good stocks, with over 100 factors that can be considered at times. However, Templeton did have four criteria which he considered particularly important: i) P/E ratio, ii) Operating profit margins, iii) Liquidating value and iv) Consistency of growth rates. Templeton also looked for any potential catalysts (new markets and products, potential M&A, as well as industry changes). more »

Value Investing
6 Month Return: -1.0%
T Rowe Price Screen

A GARP investing approach based on identifying companies with long-term prospects in their early stages before they become "glamour" stocks. Price looked for these characteristics in growth companies: At least a 10% return on invested capital Sustained high profit margins Superior growth of earnings per share. He also looked for: Superior research to develop products and markets. A lack of cutthroat competition. A comparative immunity from government regulation. Low total labor costs, but well-paid employees. more »

Growth Investing
6 Month Return: -1.1%
Quality Income Screen

In 2012, the team at Soc Gen introduced their so called ‘SG Quality Income Index’ - an index that aims to track stocks with strong fundamentals and good yields. Many in the market now appreciate that both higher ‘quality’ stocks and higher yielding stocks tend to outperform, but according to the research note, stocks that share both qualities put together standout total returns that have averaged 11.6% per year since 1990, more than doubling the return of the global equity markets at a significantly reduced volatility. But what is more striking is the return of the portfolio from when the market topped in 2000 to 2012 - a sideways market and a genuinely miserable time for all. While the total return of stock markets has actually been negative in that time period, the Quality Income index almost tripled. Read the full article. more »

Income Investing
6 Month Return: -1.4%
Price Momentum Screen

A momentum screen based on buying prior winning stocks and selling short prior losers based on the empirical observation that Investments exhibit persistence in their relative performance. Buying winners inherently conflicts with the contrarian philosophy that is part and parcel of many successful investors. Nevertheless, it has long been noted by traders that good performing investments tend to continue to do so, whereas those that have performed relatively poorly tend to continue on the same path. This screen looks for high relative strength in the last six to twelve months compared with the market (top 25%) - relative strength doesn't work over short timeframes, such as one month. It excludes the most illiquid stocks, i.e. the bottom 25% of stocks based on market capitalisation. You can read more here.  more »

Momentum Investing
6 Month Return: -1.6%
Bold Earnings Revisions Screen

This screen seeks to identify stocks that have experienced recent revisions in the earnings estimates. Specifically, it looks for stocks that have seen one analyst revision in the last week/month, to try to see if there is an analyst moving away from the consensus. This follows research that showed "bold" estimates like this have a significant impact on share price performance. Note: that this screen on its own isn't able to only pull back revisions that are "bold" (moving away from the consensus), as opposed to revisions that are "herding" (moving closer to the consensus). This will need to be done by analysing the actual list of companies produced in more detail. more »

Momentum Investing
6 Month Return: -1.9%
67 strategies sorted by