Ranked by 28-Period Williams %R as of 02/20/09 *

Key

Growth Momentum Stock Screening Criteria

        The approach focuses on companies with proven records of earnings growth while still in a stage of earnings acceleration.  It was developed by a well know author.  When screening for quarterly earning increases, it is important to compare a quarter to the same quarter last year. Strong industry fundamentals should show up for a number of companies.  The system tries to identify the strong companies leading the current market cycle.  The screen specifies a minimum annual growth rate of 25% in earnings per share from continuing operations over the last five years.

     A stock needs a catalyst to start a strong price advance. It is possible to study the companies passing the preliminary screens to see if any catalysts exist.  A second consideration that the author emphasizes is that investors should pursue stocks showing strong upward price movements. The author says that stocks that seem too high-priced and risky most often go even higher, while stocks that seem cheap often go even lower.  The author's newspaper highlights stocks within 10% of their 52-week high and this was the criterion established for this screen.  The author found that 95% of the winning stocks had fewer than 25 million shares outstanding, while the median for the group was 4.6 million.  We used a screen for stocks to have fewer then 20 million shares outstanding. 

     Relative strength compares the performance of a stock relative to the market as a whole.  The author recommends only looking for stocks with a percentage rank of 70% or better—stocks that have performed better than 70% of all stocks.  A stock needs a few institutional sponsors for it to show above-market performance. Three to 10 institutional owners are suggested as a reasonable minimum number.  The final aspect of the system looks at the overall market direction. 

     Information is provided by the American Association of Individual Investors.