Enterprising Investor Forum

S&P stock screen Tuesday, October 14, 2008

It’s been a while since we ran one of our screens! In the midst of all this turmoil and our continued posts on looking for Small Cap Value, some of our readers have asked us about interesting opportunities in the S&P.

Needless to say, there are a number of high quality companies trading at extremely distressed prices and don’t forget that you could always avoid having to take a specific bet by simply buying the SPY ETF that tracks the whole S&P500. However, we thought that it could be interesting to look at it a different way and look for one of the less obvious names and ran the following screen:

• S&P Index Membership
• Return on Equity >/= to Industry Average Return on Equity
• Price/Book </= to Industry Average Price to Book
• P/E Ratio </= to Industry Average P/E Ratio
• Income per Employee >/= to Industry Average Income per Employee
• Inventory Turnover >/= Industry Average Inventory Turnover
• Debt to Equity Ratio </= Industry Average Debt to Equity Ratio
• Dividend Payout Latest Fiscal Year >/= Industry Average Dividend Payout Latest Fiscal Year
• Net Profit Margin >/= Industry Average Net Profit Margin

Would you believe that the above screen only gave us one name? That’s it, the only company that came up is:

Total System Services, Inc. (NYSE: TSS).  From the Yahoo! profile page:

• Total System Services, Inc. provides electronic payment processing and related services to financial and nonfinancial institutions. The company’s services include processing consumer, retail, commercial, and government services, as well as stored value and debit cards. It also offers merchant acquiring services to financial institutions and other organizations. In addition, the company provides risk management tools and techniques, such as credit evaluation, fraud detection and prevention, and behavior analysis tools; and revenue enhancement tools and customer retention programs, such as loyalty programs and bonus rewards. It offers its services in the United States, Europe, China, Japan, Mexico, and Canada. The company was founded in 1982 and is based in Columbus, Georgia. Total System Services, Inc. (NYSE:TSS) operates independently of Synovus Financial Corp. as of December 31, 2007.

A quick check shows us that this company is currently rated a ‘BUY’ on the Barron’s stock grader system and that Morning* gives it 4 stars. Does this mean that this is an automatic ‘BUY’? The answer is NO! This simply means that after having filtered through our screen, it appears that other people following this company think that it has good prospects… now it is up to the Enterprising Investor to do his own due diligence to understand if this company is really worth investing in and if it fits into a specific investment strategy.

Enjoy your research and let us know what you think!

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