Where Can I Find Well-Managed Companies?

Wouldn’t it be great if someone screened financial data from several thousand publicly traded companies for the management parameters described in this book? The people at www.ayionline.com have poured over more than 4,000 publicly traded companies in search for the proverbial needle in the haystack. The process yielded approximately 20 stocks of varying capitalization and age. The financial data of each company has been plotted and posted on our website, www.ayionline.com. The sales/share and EPS growth rates have been calculated along with share price doubling time, please refer to the following example.

A short description of the company and the industry it operates in is given. All the work has been completed for you. We screened several thousand companies, then plotted the financial data and estimated relevant parameters for you. How much easier can it get? All you have to do is decide which company suits your investment strategy.

If you want to screen and estimate the parameters yourself, start on the Internet or in the library with Value Line.

One of the most efficient stock screening methods involves leafing through Value Line’s Ratings and Reports section and visually inspecting the share price graphs they have constructed over the last 5 to 10 years. Based on these graphs, it is clear whether the company has done well over the last five years.

Online screening is an art to say the least. To date there is not one site that calculates past performance according to the established methods described in this module. For example, our estimates for past growth for a company might range between 23 to 25 percent. Past growth values for the same company online might yield a range that spans 17 to 50 percent. This is frustrating because this parameter is the strongest predictor of future performance. Since past performance is hard to screen online, indirect screens are made based on ROE, cap size, profit margin (you will have to calculate pre-tax profit margin), and future earnings estimates. These parameters are easily screened online.

One of the best online stock screener can be found at www.siliconinvestor.com. They have a basic screener and an advanced screener as well. The advanced screener accepts high and low values, which is useful for defining ranges. To use the advanced screener you will have to register. This is free and it does not create unwanted solicitations.

When you find a promising company online consider going to the library and looking up the financial data of the company on Value Line. Plotting the financial data on semi-log paper supplied at www.ayionline.com will generate a visual history of the company’s performance. The problem with online financial data is that it only dates back 2-3 years. In addition, the online financial data is almost never normalized to changes in outstanding shares. This is true even at a company’s own website.