Screening for Investment Ideas Tuesday, September 4, 2007
Posted by ei-forum in Screening Criteria.trackback
As part of our series on screening ideas, we though that we would focus this post on trying to identify some investment ideas. We used the MSN Money Deluxe Stock Screener but you can run this with pretty much any program.
For the purpose of this post, we started by looking for the New 52-Week Lows on the NYSE. Here are the top 7:
- CorpBanca (BCA)
- Barclays (BCS)
- Chesapeake Corp (CSK)
- Capital Senior Living Corp (CSU)
- Dillard’s Inc (DDS)
- Fidelity National Financial Inc (FNF)
- Gottschalks Inc (GOT)
We then wanted to see if any of these candidates were trading close to their Book Value, say screen for equal or under 1,3:
- Gottschalks Inc (GOT)
- Dillard’s Inc (DDS)
- Chesapeake Corp (CSK)
- Fidelity National Financial Inc (FNF)
Now let’s see which company is trading at a P/E ratio which is under the respective industry average:
And what about adding a Debt to Equity Ratio under 1? Both stock still come up. So we’ll add a minimum Return of Equity of 10%…. and the finalist is:
- Fidelity National Financial Inc (FNF)
Does this mean that you should rush out and buy this stock? No, of course not but this could be a starting point to see if you should investigate further and maybe consider taking a position. We would recommend having a looks at recent news and then recent annual reports if the stock still interests you.
Enjoy your research!
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The reason FNF is selling at a 52 week low and about a buck over book value is because much of it’s revenue and income is derived from mortgage origination products such as title insurance,home warrenties, claims management, and escrow services.
Lehman brothers today lowered it’s EPS estimate and target price to $1.32 and $20.00 respectively.
I think Lehman’s target price is overly optimistic and a forward P/E of 10 will value this stock at $13.20 by year end.
However, due to the companies low debt to equity ratio and high cash flow the $1.20 dividend should be safe and pay patient investors to wait for a better day.
Thank you for your note. We agree that the longterm and patient investor will be rewarded!