John Neff’s Screen Results
John Neff, turns out, is a lot like me. Likes buying quality companies when they’re undervalued and out of favor. Makes sense to me. So he had a method/equation he used to find investable companies. If Total Return (earnings growth + dividend yield) divided by the price to earnings ratio was at least 2:1, he took interest. Using numbers provided by Simply Wall Street, here is a list of quality companies whose growth + yield are more than 2x the current P/E ratio. All are profitable and relatively stable, out of favor and relatively cheap. Obviously, do your own research. I just want to share some of the results to offer up new ideas to anyone looking to spread their wings.
Here are the results, I do own some of these FYI.
$NUE, $STLD, $KBH, $LEN, $HIBB, $MATX, $WIRE, $WGO, $BCC, $PATK, $CCS, $HVT, $MDC, $SLM, $NAVI, $AIG, $LYB, $GS, $PHM, $LU
I share my portfolio, but to save anyone time, I currently own $MATX , $WIRE , $BCC , $MDC , and held $LU is the past, but it appreciated like 30% in a week immediately after I bought it (100% luck to happen that quickly), that’s a sell in my book. Gotta remember to not be greedy, pigs get slaughtered. If I can make 20%-30% in a month, I’ll take it and move on. Too many opportunities to make money to be in love with any stock.
I hope that provides some new companies for a few value investors. Enjoy!
Remember, if you like charts, you’ll hate most of these stocks😉I go against the crowds momentum, hence the success.
On a side note, $MATX & $WIRE are showing up on lots of my different quality screens. Those are the two you may want to evaluate first😉
Let me know what you like or hate, be sharing one a week for a while.
PS: I mentioned I use ZERO forward looking anything; however, to build Neff’s screen, I had to use 12 month FWD earnings estimates to estimate total return. I reduced analyst earnings estimates by 10% to increase my margin of safety further and ensure estimates were conservative. This will be the ONLY time forward looking anything will be used in a post of mine🤙
can I ask how you screened for that, or what site you used? Cheers
@retire4life I use a gang of apps that do a lot of leg work and reduce the information I need to consume to eliminate emotion and facilitate efficient analysis. This list came 100% from the Simply Wall Street app. I use the free version, like most apps I use, but it provides me with what I need without the paywall. If one does want to pay, they have some of the most interesting analytical breakdowns with more useful information than most apps I’ve come across. They are also one of three apps I use that estimates a fair value/margin of safety. It is on a short list of apps I want to try a paid trial of. Usually, I just need the data & that’s often free.
Anyway, Simply Wall Street has a “Discover” tab on the bottom of the screen that takes you to sample portfolios; based on spotless management, high ROE + undervalued, all types of criteria and portfolios of a couple dozen guru’s and funds. The columns of statistical data on the app include forward earnings estimates, dividend yield, and current P/E ratio, among other metrics. So for this one, I had to do it the hard way and scroll through all the companies, adding earnings estimates to dividend yield and seeing if it carried the 2:1 ratio Neff looked for.
I’m reading a book now about ValueGrowth investing. Breaks down strategies of some legends. I’d already read books on most I was familiar with, but some were new. In the early days, I loved reading books, then doing screens based on metrics they thought most valuable. Adding those quality & valuation metrics that demonstrate probable future business growth & efficiency to all Buffet’s psychology lessons, has been a long & fulfilling journey. That’s sort of what this has evolved from.
@retire4life anytime! My goal is to share as much wisdom as possible. Just posted two additional lists of an extensive screening model I spent all day building, narrowing a list of Value Line’s 100 Highest Growth Company’s to the top 25 based on dozens of financial, profitability, efficiency, valuation, & margin of safety metrics & scores. Hope you enjoy🤙