Ideas Brought to You by the Letter F
Before we move into the weekend, I want to review one of my favorite ways to use F-scores. It is a useful tool in all steps and stages of stock selection process but it really shines in finding investments with a little more of a long-shot flavor to them. These are companies that carry more debt than I would usually consider acceptable and that trade at steep discounts to their asset value. A high F-score indicates to me that a company's fundamentals are improving and that it is generating sufficient cash to carry the debt load. In addition, there is a high probability that the two-edged sword of leverage will cut in our favor.
In running the screen for leveraged companies trading below tangible book with high scores, I noted an unusually short list of candidates. Just 24 U.S.-listed names make the final cut. Only eight of these have a market cap in excess of $100 million. There is only one stock with a market cap above the billion dollar mark. As the market has worked higher this year, the list of opportunities for cheap stocks has gotten shorter and smaller....501 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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