Stock Picks – 52 Week Low Screen

Amazingly – this screen produced a candidate – L Brands Inc., even after the huge rally yesterday:

Click on the link to research further.

This points to a very interesting trend – traditional retail is getting crushed – look at Macy’s and the Gap:

• Zacks – Gap (GPS) Posts Dismal April & Q1 Comps: Stock Crashes
• AP – Macy’s struggles go on … outlook slashed

The only retail company that is growing sales seems to be Amazon AMZN, which makes sense – it is practically the only place I shop these days.  Great company – but I can’t invest in a stock sporting a current PE Ratio of 290!

Also, I don’t find many of these retail stocks very compelling as an investement idea – they look like Value Traps to me:

• Business Insider – One paragraph nails everything wrong with big-box retailers like Gap and Macy’s

52 Week Low stock picks are based on the following screen:

1. Morningstar analysis available.
2. Less than 5% above its 52 week low.
3. Greater than or equal to Narrow moat.
4. Free cash flow/enterprise value greater than 5% (should be above what the 10 Year Treasury Bond is yielding).
5. Financial Health Grade >= B.
6. Forward P/E <= 20.
7. Stock Industry not = Asset Management
8. Dividend Yield % >= 3
9. For candidates that have passed all the filters, review the individual stocks Return on Invested Capital (ROIC) for the previous 10 years to select the best long term candidates.