Sunday, January 8, 2012

Under $3 Quality Stocks

Yesterday, I mentioned something about Stock Screens. I been testing out about 20 different screens. Ten of them of have at least doubled the performance of the S&P.

I been running a screen for stocks under $3 which has been doing exceptionally well. Today, I will start a simulated portfolio utilizing this screen, lets call it the under $3 quality stock. The first stock in the account will be:
Atlantic American Corp.

Reasons to buy this stock:

1.slightly above 50 day moving average
2.earnings growth... it is all about earnings growth with this company. 4 years ago, they lost $4m and 3 years ago they lost $1.2m. But then last year, they made a profit of $2.4m and looks like they will grow earnings by more than 30% in 2012 compared to 2011.
3.Price/Sales ratio is significantly lower than it competition about 40%.

Those are nice little figures, the kind I like to see.

Let me give you fair warning though, AAME and most of the other stocks to come into our "Under $3 Quality Stocks Portfolio" are designed to be held for at least a YEAR.
Volume is low and the beta can be high. The thinking here is to average into the stock. I don't worry too much about the liquidity when I first purchase it because first of all, I'm in no rush to get out of it and second when I am ready to sell, institutions have started sniffing around and volume is substantially higher or if volume is still very low, I will average out of the stock.

I will be creating a new page for "stock screens" where readers can look up the progress of our "Under $3 Quality Stocks Portfolio"

Take a look at the new Daily Market Prediction page to see whether the market will be moving higher or lower tomorrow.

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