Bargains In Shares Of High-Quality Businesses
Following the market’s sharp sell-off in April, concerns over global conflicts and tariffs have eased, and the S&P 500 has returned to new highs. Yet despite the market’s strong performance, opportunities remain: shares of many high-quality businesses are still trading at attractive discounts.
In today’s Saturday Stock Screen, we’re taking a look at the latest list of potential opportunities popping up on our radar.
Each week here at Porter & Co. we apply our brainpower to uncover the most compelling, highest-upside investment ideas. And with this complimentary issue of the Daily Journal, we draw back the curtain to show you how we do it.
An important tool in our analytical toolbox is our stock screens, in which we apply a list of criteria – relating to different financial, accounting, and performance parameters – to sift through the 3,000+ publicly traded stocks on U.S. markets. That’s how we’re able to identify the tiny fraction of the universe of U.S.-listed stocks that offer the best opportunities for making money.
We often use the results from these screens as a starting point for more in-depth analysis for possible inclusion in The Big Secret On Wall Street portfolio or any of our other portfolios.
For Partner Pass members, we’ll sometimes highlight an opportunity from the screen, or elsewhere, that appears particularly compelling (but not this week) – not as an official recommendation, but as a stock that’s on our radar.
Questions about our Saturday Stock Screen?… drop us an email at [email protected].
This week’s screen is inspired by the late Charlie Munger, Warren Buffett’s business partner, who once described a dead-simple strategy for beating the market:
If all you ever did was buy high-quality stocks on the 200-week moving average, you would beat the S&P 500 by a large margin over time. The problem is, few human beings have that kind of discipline.”
Our Modified Munger Screen applies the following criteria, based on this original idea:
- Return on equity (“ROE”) exceeding 20% as a filter for high-quality businesses
- Insider purchases within the last three months, to screen for businesses where insiders see enough value in their own shares to make an open-market purchase
- Market capitalization over $1 billion to exclude micro-cap, low-liquidity stocks
- Stocks trading below the 200-week moving average, as well as those trading up to 5% above the 200-week moving average (this extra 5% lets us capture an additional set of stocks that are within 5% of trading below their 200-week moving average – a trend line that shows that average price of a stock over the last 200 weeks)
We also display each stock’s price-to-earnings (P/E) ratio, as well as its beta (a measure of volatility versus the overall market). These are not used in the screening criteria, but rather to provide a reference point for noting the valuation and volatility of the stocks on the list.
As of Thursday’s close, this screen produced the following 16 stocks:
Highs And Lows
Each week, we also monitor any stocks in the market making 52-week highs. We do this because any stock on its way to generating 2x, 3x, or 10x returns will spend a lot of time making 52-week highs along the way. Thus the 52-week-high list provides an opportunity to flag these potential high performers before they really break out, with a particular emphasis on lower-profile, less widely-followed stocks that might have otherwise gone unnoticed.
Notable stocks making new 52-week highs last week:
- AGCO (AGCO)
- AutoNation (AN)
- ANSYS (ANSS)
- Artelo Biosciences (ARTL)
- Broadcom (AVGO)
- BlackRock (BLK)
- Bentley Systems (BSY)
- Boyd Gaming (BYD)
- The Carlyle Group (CG)
- Coinbase Global (COIN)
- CoStar Group (CSGP)
- Dollar Tree (DLTR)
- Emerson Electric (EMR)
- Fastenal (FAST)
- Flex (FLEX)
- Ferguson Enterprises (FERG)
- Houlihan Lokey (HLI)
- Hilton Worldwide (HLT)
- Interactive Brokers (IBKR)
- Southwest Airlines (LUV)
- 3M (MMM)
- Nvidia (NVDA)
- Marqeta (MQ)
The Dark Consequences Of Trump’s New Investment
President Trump’s administration plans to funnel billions of dollars into one specific AI company. On the surface, this investment looks like the next step in Trump’s goal to make the U.S. the AI capital of the world. But dig a little deeper, and the consequences of this investment could be much, much greater than that. This company has the power to send the current AI king on a swift and ruthless 50% crash starting as soon as August 1 bankrupting Americans who don’t see it coming. But those who do could stand to realize historic gains over the next 12 months.
We also monitor stocks on the 52-week-low list. In many cases, the names on this list are there for good reason – the market is often correctly pricing in their weak fundamentals. However, once in a while, a great business with excellent long-term prospects finds itself on this list due to a temporary setback. This can create the rare opportunity to buy top-shelf merchandise at bargain-basement prices.
Notable stocks making new 52-week lows last week:
- Molina Healthcare (MOH)
- ConAgra Brands (CAG)
- CNA Financial (CNA)
- The Campbell’s Company (CPB)
- Elevance Health (ELV)
- Fidelity National Financial (FNF)
- First American (FAF)
- General Mills (GM)
Porter Stansberry
Stevenson, Maryland