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Just about every week or so Zacks presents
a new screen for reader review.

This one seems like a pretty good screen in theory
and the results are very pleasing to the eye (and wallet)
with a CAGR over 35% in each of the last 6 years.

The only modifications that I made were to have
the rating change criteria to be >0 and be in the top 3.

So here is a direct copy of what they presented from
the url on down. Any improvement ideas?

Current picks:

Zacks Commentary: Screen Of The Week
By Kevin Matras
Feb 20, 2007

I'm excited to share a new screen with you this week.

It's a very robust strategy in and of itself, and works exceedingly well with many of our other strategies that come loaded with the Research Wizard program.


Zacks Rank <= 2 Or
The % of Brokers Ranking the Stocks a Strong Buy/Buy >= 50%
(I'm looking for stocks that have a Strong Buy or Buy Rating from Zacks or is ranked Strong Buy or Buy with 50% or more of brokers.)

Price to Sales <= .75
(A Price to Sales Ratio of 1 means you're paying $1 for every $1 of sales the company makes. A P/S Ratio of .75 means you're paying only 75 cents for every $1 of sales the company makes – which is a great value.)

ROE >= 15
(This is net income divided by common equity and is a measure of how good a company is being run. In other words, a company with an ROE means that 15 cents of assets are being created for every one dollar of shareholders equity.)

Current Price >= 5

Average 20-Day Volume >= 100,000
(I want to make sure it's well traded.)

% Rating Change over the last 4 Weeks = Top # 5
(This narrows the screen down to the five stocks (always only five stocks) with the biggest, (i.e. best) increase in the Average Broker Rating.)

I ran a series of separate tests over the last six-year time span using a four-week holding period and starting each run on a different start date to eliminate coincidence and to verify robustness.

In 2001, this screen showed an average compounded gross return of 51.4%.

In 2002, it showed a 36% return.

2003; a whopping 91.2% return.

2004 showed a 35.9% return.

2005 was 44.4%.

And in 2006, the average compounded gross returns were 58.4%.


I've also been experimenting with a slightly higher percentage of Strong Buys/Buys and have found that 60% does very well too. But much higher than that starts diminishing returns instead of increasing them.

Give this strategy a try in your own trading and see how it can help you pick better stocks.

This strategy always picks only five stocks per run.

Here are three of them for this week (Tuesday 2/20/07):

KR Kroger Co.
TOA Technical Olympic USA
TSO Tesoro Corp.

Sign up now for your two-week free trial to the Research Wizard and get the rest of the stocks on this list. Start trading this strategy today. And don't forget to check out the other winning trading strategies that come loaded with the program. Know when to buy and when sell. It's all there.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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