Stock Fundamentals from Buffett, Graham and Greenblatt

Amidst the tumult of today’s markets and economy, making investment decisions can be challenge. A wise approach, according to a recent Forbes article by Validea CEO John Reese, is to turn off all the noise and circle back to fundamentals.

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He highlights focusing on the numbers, staying disciplined in your investment approach, and guarding against emotional decision-making as central to his own philosophy and those of gurus that inspire the Validea stock screening models. Using this fundamental-centered approach, Reese identifies the following five picks:

  1. Gamestop (GME) is an omni-channel video game retailer. This stock earns a perfect score under the Joel Greenblatt-inspired screen due to strong earnings yield of 18.27%, and the Peter Lynch-based model categorizes GameStop as a “dividend payer” based on its revenue base of $9.27 billion.
  2. Amtrust Financial Services (AFSI) provides specialty property and casualty insurance products. The Peter Lynch-inspired screening model favors the company’s P/E/G ratio of 0.33, and the Martin Zweig-based strategy gives high marks to the company’s price-earnings ratio of 9.17.
  3. Unifi (UFI) processes and sells yarn. The stock’s price-sales ratio of 0.72 earns high marks under the Kenneth Fisher-based screen, and the Benjamin Graham-inspired investment model likes Unifi’s liquidity (current ratio of 2.81) and price-book ratio of 1.43.
  4. LG Display (LPL) manufactures thin-film transistor liquid crystal display and other display panel technologies. The James O’Shaughnessy-based model likes its healthy and consistent earnings growth, and the Joseph Piotroski-inspired screen gives a thumb’s up to positive operating cash flow of $2.48 billion.
  5. Argan (AGX)provides engineering and consulting services to the power generation and renewable energy markets. The Joel Greenblatt-based screen favors AGX’s earning yield of 19.62%, which ranks it among the top 20 stocks in our database.