See the afl below. Maybe someone with more experience could complete this with buy/sell signals and the other requirements defined.
Did an Explore and found 6 stocks from the Russel 2000 on 12-05-06 that met this requirement. CQB 12/5/2006 LEV 12/4/2006 LFG 12/5/2006 OHB 12/5/2006 STC 12/5/2006 STTX 12/5/2006 AFL below //Cherry 12-02-06 S&C Dec 2006 Page 38 SharesOut = GetFnData("SharesOut"); SalesPerShare=GetFnData("SalesPerShare"); BookValue = GetFnData("BookValuePerShare"); EPS = GetFnData ("EPS"); EPSEstCurrent = GetFnData("EPSEstCurrentYear") ; EPSEstNext = GetFnData ("EPSEstNextYear" ); ReturnOnEquity = GetFnData("ReturnOnEquity"); GrossProfit = GetFnData("GrossProfitPerShare"); ProfitMargin = GetFnData("ProfitMargin"); OneYrTarget = GetFnData("OneYearTargetPrice"); Dividend = GetFnData("DividendPerShare"); PE = Close / EPS; MarketCap=SharesOut* Close; AnnualRevenues=SalesPerShare*SharesOut; DividendYield=(Dividend / Close) * 100; Filter= ((((Close >10 AND Close< 100) AND MarketCap>0 AND SalesPerShare>0 AND BookValue>0) /* The market capitalization rate (defined as the number of shares outstanding times the stock price) compared to annual revenue is a first consideration. if the value of outstanding shares times price exceeds corporate annual sales, the stock is expensive AND should be avoided. Example: 30 million shares outstanding x a price of $13 = $390 million compared to annual revenues of $575 million. The stock is a potential Buy. */ AND (AnnualRevenues>MarketCap*1.5)) // Vary number /* A company's net worth (shareholders' Equity) divided by the number of shares is defined as book value. A stock worth buying should Sell around book value OR about 1.5-1.7 times book value. A higher value incurs too much risk. Example: The recent price of a stock is $20. The book value is 31 OR 1.55 x the stock price of $20. The stock is a potential Buy. */ AND (Close*1.1<BookValue)) // Vary number AND DividendYield>0.5; // vary number AddColumn (Close, "Close", 1.2); AddColumn (Marketcap,"MarketCap",1.0); AddColumn (SalesperShare,"SalesPerShare"); AddColumn (SharesOut,"SharesOut",1.0); AddColumn (AnnualRevenues,"AnnualRevenues",1.0); AddColumn (BookValue,"BookValuePerShare",1.2); AddColumn(DividendYield,"Dividend Yield",1.2); /* S&C Dec 2006 Page 38 MINIMUM EFFORT, MAXIMUM return What factors can small investors who desire to make investments AND manage their portfolios personally focus on to minimize time AND effort AND maximize investment return over a one- to two-Year investment time frame? I have been investing for more than 20 years, AND a few select factors, it is clear to me, may be utilized as a minimal set of conditions for selecting investments. These factors may include, but are NOT limited to, beta, diversification, AND dividends. Understanding complexities such as volatility, trend, structure of averages in the stock market, AND so on, is more appropriate to High-level, advanced trading. Formula plans based on such factors as price/earnings (P/E) ratios, AND other statistics can yield decisions such as selling OR buying under specified conditions, such as buying at 10 times earnings AND selling at 20. for the small investor, this type of data must be simplified based on the constraints of time allowed for portfolio review AND management. THE FUNDAMENTALS The market capitalization rate (defined as the number of shares outstanding times the stock price) compared to annual revenue is a first consideration. if the value of outstanding shares times price exceeds corporate annual sales, the stock is expensive AND should be avoided. Example: 30 million shares outstanding x a price of $13 = $390 million compared to annual revenues of $575 million. The stock is a potential Buy. A company's net worth (shareholders' Equity) divided by the number of shares is defined as book value. A stock worth buying should Sell around book value OR about 1.5-1.7 times book value. A higher value incurs too much risk. Example: The recent price of a stock is $20. The book value is 31 OR 1.55 x the stock price of $20. The stock is a potential Buy. The value of the P/E ratio versus rate of earnings growth should be determined. if the P/E is NOT more than a third to half of the projected five-Year earnings growth rate, the stock can be considered safe. You should NOT pay more than 20-25 times earnings for a stock. This is a difficult scenario in an overvalued stock market AND requires diligence in finding the right company's stock. In today's market, it may be necessary to go to 30, but NOT over, for a small investor. Example: EPS is 1.55 in the Year 2005. The EPS in 2000 is 1.14. (1.55 - 1.14) /1.14 = 0.36 OR 36%. The P/E of the stock is 12, a third of the EPS growth, AND the stock looks promising. Other considerations might include the following: P/E ratios should be less than OR equal to the average highs over the last three years. The stock price should be less than OR equal to three-quarters of book value per share. The ratio of current assets to current liabilities should be greater than OR equal to 2.0. The ratio of total debt to stockholders Equity should be less than OR equal to 1.0. The EPS growth should be 10% of compound annual growth for the last 10 years. Some industry groups have run into subtle issues, the first example of which was the steel industry in the late 1970s, AND Now the automotive companies. The impact of pension costs has a significant impact on stock performance. while certain automotive companies are recommended, such investments would be out of the question for a small investor due to unusually High pension costs that will affect company performance overall. A last consideration that might be employed is to ascertain the value of the firm using the Gordon model (VB) defined as: VB = (Next Year's dividend) / ((required rate of return) - (estimated long-run dividend growth)) VB should be approximately equal to EPS. ^ Always look for a company stock that pays a dividend. Diversification is inherent in this model, as the industry is NOT analyzed directly. Only the data for a selected company in an industry group is analyzed. Obviously, you would NOT build an investment portfolio with stock selected from only one industry. A HYPOTHETICAL SCENARIO As an example, say you have selected a stock with a recent price of 13, a P/E of 11.5, AND a dividend yield of 0.9%. The market capitalization is $360 million AND the revenue is $3.2 billion. The book value is 21.5 AND the recent price is 13. The P/E ratio vs. rate of earnings growth is 38%, Close to our specification of a third of the P/E. The stock does pay a dividend. You will find there is no merger OR acquisitions that would add an element of risk. Pension costs are NOT prohibitive. You decide to purchase 200 shares of the stock through an Internet Low-cost broker. Since there is little additional time, you ascertain that the current assets/current liabilities are less than 2.0; the ratio of debt to stockholders Equity is less than 1.0; AND the stock price of 13 is less than three-quarters of the book value per share of 22. December 2006 Technical Analysis of STOCKS & COMMODITIES 39