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Distressed Stocks

An Overview of the Distressed Stocks Strategy

Concept: This search looks for potential turnarounds. It looks at companies whose stock is near a 52-week low yet shows positive momentum. Specifically it looks for year-to-year revenue growth and analyst projections of at least 20% earnings growth in the upcoming year.

Location of Screen: This screen is built into the MSN screening tool

Updated: Continually, based on current market data

Inception: This has been included as early as 2006, perhaps before

Stock Screen Parameters for the Distressed Stocks Screen

The below bullet points use technical parameters that can automatically be screened. These parameters are run by Sum of Some using the MSN screening tool. The text in italics explains how the parameter was defined in the screener.

1) Find Lows with Momentum: The MSN Screener has a built in feature to find stocks near their lows yet still show momentum (or it can be set to show a lack of momentum, etc). The momentum is calculated as quarter over quarter for a period of time which can be entered.

Parameter: Near Low With Positive Momentum = True Now

2) Ignore Small Fries: Many screens will toss out companies with tiny market caps since they are often volatile and hard to apply rules to

Parameter: Market Capitalization >= 50,000,000

3) Find the Growth: Find companies that the analysts think will show positive earnings growth, and those which have already shown positive revenue growth (or in this case, not negative) in the past year

Parameter: EPS Earnings Growth Next Year >= 20
Parameter: Revenue Growth Yr vs Yr >= 0