Stock Screen: Bottom Hunter

Stock Screen: Bottom Hunter

The goal of this screen is to discover companies that may be near their bottom and ready for a rebound in price given their strong fundamentals.

You can view the latest results here: Screen: Bottom Hunter

Filters

In this section, I'll summarize the key filters used in the default Bottom Hunter screen:

  • % of 52 Week Low < 150%
  • Debt / Total Capital = 0%
  • EV / Fwd EBITDA < 15x
  • EV / Fwd Revenue < 3x
  • Revenue CAGR (3y) > 5%
  • Adj EBITDA Margin > 0%

Filter 1: % of 52 Week Low

% of 52 Week Low is defined as:

% of 52 Week Low = Stock Price / 52 Week Low

52 Week Low represents the lowest trade price for the company's stock in the past 52 weeks. Here's the default filter:

Filter % of 52 Week Low


To get guidance on threshold to use, I used the STAT BY SECTOR button. At the time of this writing (July 27, 2016), most sectors were trading around 150% of their 52 Week Low:

STAT BY SECTOR


Filter 2: Debt / Total Capital = 0%

Debt / Total Capital measures a company's current capital structure, financial solvency, and degree of leverage.

Debt / Total Capital = Debt / (Debt + Market Cap)

Since companies are trading near their 52 Week Low may be in trouble, I wanted to remove companies with any bankruptcy risk to give management enough runway to recover. Here's the default filter:

Filter Debt / Total Capital


Filter 3: EV / Fwd EBITDA < 15x

EV/EBITDA is calculated by dividing Enterprise Value by EBITDA is often used to benchmark the fair market value of a company. I wanted companies trading a reasonable multiple (< 15x):

Filter EV / Fwd EBITDA


Filter 4: EV / Fwd Revenue < 3x

EV/EBITDA is calculated by dividing Enterprise Value by Revenue. I wanted companies that have sufficient revenue and are trading at a reasonable multiples (< 3x):

Filter EV / Fwd Revenue


Filter 5: Revenue CAGR (3y) > 5%

Revenue CAGR (3y) represents the average annual growth rate of revenue over a three year period. It's calculated as follows:

3yr CAGR = [ Revenue FY+3 / Revenue FY ] ^ (1/3 years) - 1

where FY = Fiscal Year and FY+3 = Fiscal Year three years from now.

I wanted companies that have healthy revenue growth (> 5%) desipte the pull back in stock price:

Filter Revenue CAGR


Filter 6: Adj EBITDA Margin > 0%

EBITDA, Earnings before Interest, Taxes, Depreciation, and Amortization is a common measure of profitability. I wanted to weed out any stocks that aren't profitable on an EBITDA basis since that usually a sign of deeper troubles:

Filter Adj EBITDA Margin


Downloading Results

Once the screen returns the relevant matches, you can either research the individual names further or create a portfolio based on the results.

To add any match to your Watchlist, just click the icon:

Add Watchlist


You can also Save the screen run again at a later time or Download all the matching results:

Download Save


Sources / Further Reading:

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