Is Castings a worthy addition to your portfolio?

Screening for companies with strong balance sheets and solid dividend yields can be a quick and simple way of identifying potentially high-quality investments that might be attractively priced. One way of doing might be to include stocks that have a Piotroski F-Score of 8 or 9 and a dividend yield of at least, say, 3%.

Take Castings (LON:CGS), for example, which is a small cap balanced super stock company in the Basic Materials sector. Castings pays out a rolling 6.02% of its share price in dividend payments.

Does Castings pass our F-Score test?

Stockopedia applies algorithms to its stream of financial data to automatically calculate the Piotroski F-Score for every stock on the market. It shows that Castings scores 8 out of a possible 9. 

By investing in companies scoring 8 or 9 by these measures, Piotroski showed that, over a 20-year test period through to 1996, the return earned by a value-focused investor could be increased by an astounding 7.5% each year. Even better, it suggests that the company is well-placed to continue to pay out attractive dividends.

Prospects for Castings

Perhaps we can see why this is by looking at the company's most recent financial results. For the fiscal year ended 31 March 2019, Castings PLC revenues increased 13% to £150.2m and net income increased 12% to £11m.

Castings's improving financial condition, reasonable yield, and decent results justify further analysis.

What does this mean for potential investors?

Castings has an F-Score that suggests it could be a promising investment candidate worthy of further research - but it's only a first step. Higher F-Score stocks can still have weaknesses and may trade at premium prices compared to other stocks. We've identified some areas of concern with Castings that you can find out about here.