TP2400x272B

20 value investment ideas for the weekend

As you may be enjoying a thanksgiving long weekend I thought you may be interested in a few undervalued companies to take a look at.

 

ERP5 = Cheap good quality companies

To find good quality undervalued companies I used the ERP5 ranking strategy in the screener.

This is an investment strategy developed by two good friends of mine that finds undervalued companies based on the following for ratios:

  • Price to Book,
  • Earnings Yield,
  • Return on invested capital (ROIC) and
  • 5 year average ROIC.

The lower the ERP5 rank the more undervalued the company is.

 

ERP5 back test

We have tested the ERP5 rank as an investment with very good results. Over the 12 year period from June 1999 to June 2011 it substantially outperformed the market as well as the Magic Formula investment strategy.

You can read more about the back test here: ERP5 back test

Undervalued high quality companies

As you can see the ERP5 rank not only looks for undervalued companies with a low price to book and a high earning yield, it also looks for quality companies that generate has a high one and five year return on invested capital.

 

What it looks like in the screener

To select the best companies according to ERP5 rank this is all you have to do:

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10 ERP5 investment ideas

And here are the 10 best ideas the screener came up with:

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Add Piotroski F-Score

To increase the quality of the companies you can add the Piotroski F-Score to you screening criteria.

This is also very easy to do:

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Slider selects best F-Score companies

Setting the slider from 0% to 30% lets the screener only show you the companies with the best (highest) Piotroski F-Score.

You can read more about the Piotroski F-Score here: This academic can help you make better investment decisions – Piotroski F-Score

 

10 ERP5 & Piotroski F-Score ideas

Here are the 10 ideas the screener came up with:

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That’s how simple it is to come up with high quality undervalued investment ideas you can research further.

  

Your undervalued company analyst wishing you a nice weekend

 

Tim_sign3 

 PS to get this strategy working in you portfolio as soon as possible click here