Earnings Momentum and Analyst Upgrade Screen

October 9, 2007 5:04 pm

I have been busy. Too busy. It has been a whirlwind of book, audiobook, podcast, clients, portfolios and much more. So, I apologize for not being close to the keyboard. That said, I realized that there were many emails and many comments about two recent posts that focused on “Quant screens” and thought that one more couldn’t hurt…

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(Excerpt from The Disciplined Investor)

The MSN Money stock-screening tool makes available some great ways to unearth sometimes buried opportunities. One that has been found to be very profitable in an upward momentum bull market is a screen that searches out the information reported by seasoned analysts. The very thought that analysts are raising their assumptions can cause the sentiment surrounding a stock to quickly change. As has been seen from the bull markets that occurred during the latter part of the 90s, earning surprises both to the up and downsides have a habit of creating either prosperity or poverty. This particular screen is meant to be used as a brainstorming tool for those stocks that may be possible short to mid-term momentum plays.

When an analyst that closely studies a certain company or sector changes his or her rating or earnings estimate for that company or sector, it is a pretty good sign that there is something more going on than meets the eye. Companies such as Zacks Investment Research are in the business of following these analysts and tracking the changes that they make to their ratings and earnings estimates.

This search focuses on the companies with the highest earnings-per-share growth projected for next year, for which the analysts have increased their estimates. It also adds additional parameters and overlays to find the stocks with the greatest recent price changes and upward-moving technical trends.

The Screen: Momentum Earnings Up
You will undoubtedly find many stocks that you have probably never heard of within these results. Caveat emptor! Try not to let yourself get sucked into the temptation of following the historic returns. Be sure to keep a cool head and think about the company and its longer-term prospects.

Momentum Screen

The screen was run on the MSN Money Site with the following criteria:
1) Earnings Estimate Increased Since <In The Last Month>
2) EPS Growth Next Yr High As Possible
3) Previous Day’s Closing Price >= 50-Day Moving Average
4) % Price Change Last 6 Mos. Display Only

Stocks from Screen (10/9/2007) : (BGP) (EQIX) (NAVI) (LYV) (BLOG) (XTXI) (OMTR) (EYE) (MDCO) (CNO) (CNTF) (CRM) (OMRI) (OCNF) (MFA) (OHB) (SLH) (OPTM) (MMR) (WRES) (ANH) (OMN) (ONXX) (INTV) (MOGN)

Disclosure: Horowitz & Company clients may hold Lng or Short positions in the stocks mentioned

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