whateverworks

Desperate Housewives -- Addendum Two

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The new Motley Fool stock screener is found in the "CAPS" section of their Website, at least for the time being. It is still being developed but works quite well. Once totally out of Beta status will it remain free? Let's hope so; however it is useful enough that the Fool may decide to charge for it.

Of course their software features many screening criteria based on CAPS ratings.

Under "CAPS Rating" you can choose up to 3 different dates of CAPS ratings (e.g. "4 to 5 stars on 2008-3-15" and "2 to 3 stars on 2007-11-1"), select a date, and choose Rated between: All Ratings 1 Star 2 Stars 3 Stars 4 Stars 5 Stars and All Ratings 1 Star 2 Stars 3 Stars 4 Stars 5 Stars.

Under "CAPS Picks" it lets you choose Min. and Max for:
Active Picks
Outperform Picks
Underperform Picks
All-Star Picks
All-Star Outperform Picks
All Star Underperform Picks
Wall Street Picks
Wall Street Outperforms
Wall Street Underperforms

You do not have to choose any CAPS rating criteria if you want to rely solely on your own choices. The screener also gives you extensive price and fundamentals criteria. I should note that although the database includes Microcaps, few are available for CAPS ratings; therefore if smaller companies are your focus you need to skip the above CAPS criteria.

Under Company Information the screener lets you choose Sector, Industry and Market Cap.

Under Price Data Min Max it lets you choose Min. and Max for:
Current Price
% Above 12 Month Low
% Below 12 Month High
4 Week Price Change %
13 Week Price Change %
26 Week Price Change %
52 Week Price Change %
3 Month Avg. Daily Volume
Price-to-Earnings (TTM)
Price-to-Sales (TTM)
Price-to-Book (TTM)

Under Risk Data Min Max it lets you choose Min. and Max for:
Beta (3 year)
LT Debt-to-Equity Ratio
Current Ratio
% Insider Ownership
% Institutional Ownership
Current Month Short Interest

Under Revenue & Earnings Data it lets you choose Min. and Max for:
Current Dividend Yield %
Revenue (MRQ)
Cash Per Share
Earnings Per Share
Dividends Per Share
Sales Per Share
EPS Growth Rate (last 3 Yrs)
Rev. Growth Rate (last 3 Yrs)
Gross Margin
Return on Equity (TTM)

As for the results, it gives you both a Key Stats View and a Screener Criteria view. Moreover, it lets you download the results to a spreadsheet.

At the moment, the only big drawback to this screener is the fact that it is easy to inadvertently choose criteria which eliminate all of the stocks in the database. You don't discover this fact until you click the "Search Now" button. This is a common problem with screeners and one which, hopefully, will be solved by the time Motley Fool takes this software out of Beta.

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Sell High, Buy Higher?

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Last week stock prices for TNE and AG dipped to my buyback point and as of the end of this week all the others (CLF GTLS EDU LNN STRA) should expire with no fills (being a full month since the orders were placed). Are they all too overpriced, now, to buy back at market price? Or should I try again for a limit order? That's the decision I'll try to make over the weekend. I almost feel like I should place another limit order to guarantee the market another month of interim bull run!

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An Unexpected Glitch in Limit Orders

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In my last post, when my month-old buy orders expired for my "sell high, buy low" stocks, I debated whether to give up and simply buy at market price or to try a limit order again. In comments, both Thomas Armistead and Russell Krull voted for another go-around of limit orders. In the long run I agreed. Might as well keep playing the strategy longer to see what happens.

Today I was astonished to see that my buyback order for Cleveland Cliffs (CLF) had been filled even though I despaired of this stock ever sinking to the level of my limit order. What happened?

It split! It split!

So of course my buyback strategy "worked". Sort of. I just bought back at my lower price, it is true, but in a sense I got only half the value planned. In a way. They say that when a good stock splits it tends to rise right back up to pre-split prices. Maybe this will still turn out to be really profitable in the long run. But if I do the math I may find I would have done better not to sell in the first place.

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My Long Term View

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Looking at the charts showing additional sub-prime and less-than stellar loans still to come due, I don't see a real turnaround in the economy for at least another year or so. Most people who need to move sell and buy homes over the summer while the weather is nice and the kids are out of school. I believe home sales over this summer will be dismal and by fall foreclosures will be even more prevalent. So much of our economy is dependent on construction, real estate and financial institutions that I just can't see a real turnaround yet.

On an encouraging note, the prolonged bear rally in stocks has inspired businesses to hang in there. The government has stepped up to start badly needed reforms in financial regulations. This has mitigated the situation and given us time to adjust to tougher circumstances. Therefore I don't anticipate a full-fledged depression.

With any luck by the summer of 2009 we will be in position for a decent home buying season and before the end of 2009 will have started to pull out of recession.

However I don't foresee another big, expanding economy and a huge, long bull market for quite a while. Our banking/credit system has a long way to go before it is really healthy again. Plus, I am guessing inflation will continue to be a problem. Most importantly, the US is no longer the controlling top dog in the world. Having just started to read Fareed Zakharia's "The Post United States World", I am looking forward to his ideas on how the US can participate and prosper in a more equal global economy. Naturally this will require adjustments.

If this recession and bear market have a silver lining, it is that it has caused us to more quickly come to grips with our changing world. Of course for several years job-seekers have been aware that more and more positions are being outsourced. Stock traders have become increasingly aware of interesting foreign companies they want to invest in. I had thought that 2007 was the year that ALL members of the active investing community had shifted to the view that we are now operating in a new, challenging, truly global economy. But from the impressions that Jamie Duglosh wrote about after he came back from the Money Show, it looks like some still believe in easy money from the US markets.

In any case, IMHO 2008 is the year that the rest of the US becomes aware of the challenges (and opportunities) involved in globalization.

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More Education and International

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I found some additional stocks I wanted to buy but my cash was tied up in buy orders for my remaining "buybacks". I finally decided that they had now risen to the point that even with a big market drop they might not meet my limit price. As for buying at their current level, I felt they were now overpriced. So I cancelled them and bought: APEI, CPLA, TCK, MR and ABB.

American Public Education, Inc. (APEI) and Capella Education Co. (CPLA) have been public only a short time and are in the education sector (which I expect to do OK during the current recession). APEI is especially interesting. It provides online post-secondary education to the military and public service communities in the United States. Thus, not only is it profiting from the current war but is in an excellent position to give veterans supplementary training to transition them into the private sector when they leave the service.

Teck Cominco Ltd. (TCK) is a Canadian mining company with operations in several parts of the world. It produces copper, zinc, metallurgical coal, gold, molybdenum, lead, indium, and germanium, and owns interest in oil sands development assets. In other words it has practically every rare metal everyone wants. I found it thanks to "the_barnacle" in the Marketocracy forums who posted a list of "the top picks for each metal sector". I don't know how he screened for "the top" but the list was a good starting point.

Mindray Medical Int'l. (MR) is a Chinese company which makes numerous, sophisticated medical devices. If you own a US or European company with similar products, watch out! It's hard to see how others can compete.

ABB Ltd. (ABB) is a Swiss company which provides power and automation technologies to utility and industry customers worldwide. Whether a country continues with petroleum, prefers nuclear, develops wind and solar or finds an entirely new source of energy, ABB will supply their needs.

So once again I have very little cash. I may kick myself when the next big bear swing begins; however I seem to do better if I grab a promising company when I see it and hold on.

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