The latest screen from S&P turns up names with top-tier growth in cash flow, revenue, book value, and its highest Fair Value score
From Standard & Poor's Equity ResearchInvestors tend to focus on earnings per share when talking about growth, but sometimes it's a good idea to pay attention to the bigger picture. Why not focus on companies that are not only seeing sharp increases in earnings per share but are also getting a pop in revenues and book value?
That was the light bulb that went off for this week's screen. More is always better when it comes to stock screens, after all: Finding positive trends in multiple categories can help build a solid case for stocks that score in all categories.
For this week's screen, we sifted our database for companies that had growth rates in the highest 20% of U.S. listed companies based on these four metrics—for the most recent trailing 12-month period vs. the same period in the prior 12 months for the first three, and the five-year average for the fourth:
2. Cash flow;
3. EPS; and
4. Book value.
In addition, each stock had to be ranked 5 under S&P's proprietary Fair Value model, a quantitative stock ranking system. The model calculates a stock's weekly Fair Value—the price at which it should trade at current market levels—based on fundamental data such as corporate earnings and growth potential, return on equity, current yield relative to the Standard & Poor's 500-stock index, and price-to-book value.
Stocks are ranked from 5, indicating significant undervaluation compared to the Fair Value universe, to 1, indicating significant overvaluation. We looked for those issues ranked 5.
To avoid speculative issues, each stock had to be priced above $5 per share and have a market cap above $500 million.
When we finished our screen, these seven names turned up.
First Marblehead (FMD)
National Oilwell Varco (NOV)
Pioneer Drilling (PDC)
Smith & Wesson (SWHC)