Porter's Journal

Hunting For Bargains In An Expensive Market 

Posted onAuthorPorter & Co.

A Cheap Stock On The 52-Week High List

With the broader U.S. stock indexes trading at all-time highs, finding high-quality businesses at discounted prices has become increasingly challenging. It helps in this environment to have a system in place for identifying rare bargains. 

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 the curtain back to show you how we do it.

In today’s Saturday Stock Screen, we’re taking a look at the latest list of potential opportunities popping up on our radar. 

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 (see below) – not as an official recommendation, but as a stock that’s on our radar.

Questions or feedback 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 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: 

  1. Return on equity (“ROE”) exceeding 20% as a filter for high-quality businesses
  2. 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
  3. Market capitalization over $1 billion to exclude micro-cap, low-liquidity stocks
  4. 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 27 stocks: 

Highs And Lows 

Each week, we also monitor any stocks in the market making new 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 new 52-week highs along the way. Thus the new 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 52-week highs last week: 

  • AGCO Corporation (AGCO) 
  • Altria (MO) 
  • British American Tobacco (BTI) 
  • BWX Technologies (BWXT) 
  • Carvana (CVNA) 
  • Caterpillar (CAT) 
  • Corning (GLW) 
  • Fabrinet (FN) 
  • GE Aerospace (GE) 
  • Intercontinental Exchange (ICE) 
  • Northrop Grumman (NOC) 
  • Roblox (RBLX) 
  • S&P Global (SPGI) 
  • Vistra (VST)

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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 52-week lows last week: 

  • CarMax (KMX) 
  • Centene (CNC) 
  • Chipotle Mexican Grill (CMG) 
  • Colgate-Palmolive (CL) 
  • Diageo (DEO) 
  • DOW (DOW) 
  • Fair Isaac (FICO) 
  • Gartner (IT) 
  • Molina Healthcare (MOH)
  • Murphy USA (MUSA) 
  • Novo Nordisk (NVO)
  • Otis Worldwide (OTIS) 
  • RLI (RLI) 
  • UnitedHealth (UNH)

– FOR PARTNERS ONLY –

Issuing Cards Gives This Company A Big Boost

Today’s selection, which recently caught our attention on the 52-week high list, IPO’d four years ago, in June 2021. After a steep 80% share-price decline from that brief peak, the stock has staged a robust recovery, surging 51% year-to-date. The company offers a cutting-edge, cloud-based card-issuing platform that serves as a vital bridge between its customers’ innovative financial products and the global payment processing space.

The platform serves a number of clients – on-demand delivery giants like Instacart and DoorDash, established financial institutions such as Goldman Sachs and JPMorgan Chase, and disruptive fintech innovators like Coinbase and Affirm – enabling them to create tailored debit, credit, virtual, and tokenized card programs. By abstracting the complexities of card issuing and transaction processing, the platform acts as a scalable operating system, enabling businesses to design, manage, and optimize innovative payment experiences with speed and flexibility.

But what’s noteworthy is that it also enables clients to offer crypto-backed debit and credit cards, facilitating the seamless use of digital assets for everyday transactions. 

(To become a Partner Pass member, contact Lance James, our Director of Customer Care, at 888-610-8895, internationally at +1 443-815-4447 , or via email at [email protected].)