Sensible Stock Picks Based on Fundamentals

While some forms of stock picking can be risky, choosing stocks based on proven strategies and underlying fundamentals can “increase an investor’s odds of enjoying outperformance over time,” writes Validea CEO John Reese in a recent Forbes article.

Reese explains that stock picking resides on a continuum comprised of varying approaches and combinations of approaches. He describes the philosophy of Benjamin Graham, the legendary investor and mentor to Warren Buffett who is widely viewed as “The Father of Value Investing,” and how his fundamentals-based investment strategy formed the basis for some of the stock screening models Reese developed.

Using these models, Reese identifies the following high-scoring stocks:

  • Masimo (MASI) is a medical technology company that develops and manufactures non-invasive patient monitoring technologies. The company has predictable earnings, a debt-free balance sheet and favorable return-on-equity.
  • JB. Hunt Transportation Services (JBHT) is a surface transportation company with persistent and expanding earnings-per-share and a favorable price-sales ratio,
  • National Beverage (FIZZ) develops, produces, markets and sells flavored beverage products and is favored for earnings predictability and growth over the past five years as well as its debt-free balance sheet and long-term return-on-equity.
  • CH. Robinson Worldwide (CHRW) provides transportation services and logistics solutions both domestically and internationally. The company earns high marks for its earnings yield, ten-year average return-on-equity and free cash flow-per-share.