Value-Investing

Momentum Investing Stock Screener

Use this stock screener to find stocks with a high Piotroski and ERP5 score and for which the stock price has shown a strong upwards momentum in the last 6 months or year.

How does this screener work?

We select all companies with a Piotroski score of between 7 and 9.
Next, these stocks are ordered descending to their relative strenght (momentum)
We take the top 20% companies and order these finally by their ERP5 ranking and the top 20 or 30 are selected to buy.

pMomentum investing vs Value investing: contradictory?

Momentum investing is buying stocks that have been up recently.
Value strategies, buying stocks which are relatively cheap.

Value investing involves trying to buy cheap securities that you think are priced lower than their true fundamental value. Momentum is the idea that stocks on the way up tend to keep going up, regardless of their value.

A value investor is likely to shun a momentum stock that is soaring higher, further and further away from its fundamental value and hence is expensive, whereas for a momentum investor this trajectory alone makes it a tempting buy. You buy stocks that look cheap on a value measure, but are beginning to go up, and show signs of positive momentum. Stocks that look cheap - e.g. having a low price-to-book or price-to-earnings ratio -- but also that have done relatively well over the last year. Stocks with both characteristics have outperformed going forward. Or you short overpriced stocks that are showing signs of momentum downwards. Our momentum investing stock screener will reveal thse stocks.

Our point of view : if you are into momentum investing, start looking for the cheapest stocks that are still outperforming, and if you favor Value, find your favorites that have the best relative strength and enjoy the style diversification and likely superior returns. Timing the styles is very tough, so combine them and reap the benefits.

Piotroski also found out in his latest study, "Identifying Expectation Errors in Value/Glamour Strategies: A Fundamental Analysis Approach" , that Piotroski score combined with momentum improves results.

Other interesting studies :

The idea behind this combination of oil and water:

The basic idea is to find underpriced value stocks with a catalyst that promises to return them to fair value. This gets over the big hurdle of value investing, namely the "when" question. A stock may be cheap, compared to its good fundamentals such as earnings and cash flow, but even the savviest investor can't say when this stock will turn around with the market finally seeing the light about the company's true worth.