TSM's approach to qualifying its stocks for their fundamentals is to run a series of proprietary, independent screens then cross
reference them. Zacks, Value Line, IBD, Morningstar, Cramer, TheStreet.com, Navellier,
Fisher, Vector Vest and Barrons all provide such rankings--mostly based on
their fundamentals as required by the screen owner.
The second column in the weekly TSM List (titled # Screens: Vector Vest (4), IBD (13), Other (12), Zacks (3)) lists the number of these screens that each TSM stock
belongs to of the total number possible (potentially 32 screens). For
example, a 1-1-7-0 quad signature for AAN means that AAN belonged to 1 Vector
Vest, 1 IBD, 7 Other and 0 Zacks screens that week. Note, Other is the
composite of all those screens mentioned in the first paragraph besides
Vector Vest, IBD and Zacks. To make the weekly TSM list, a stock has
to be a member of at least two of the different groups or at least three
screens within the same group, e.g., at least 3 of the 13 IBD screens if
there were no memberships in the other groupings.
Typically, 2,500 to 4,000 entries will be made once the screening is complete. These will then be sorted by stock symbol and
assembled into their respective quad rankings, e.g., into AAN's 1-1-7-0 quad.
At this point, there are between 100 and 500 unique stocks identified.
Further qualification (below) then narrows the final TSM list for that week
to the best of the best based on fundamentals and value. The charts of
these stocks are then looked at each evening that week to find potential
technical signals, e.g., pull back to area of support, three-day 2-period
RSI values below 5.0.
TSM Stcok Qualifications:
-
Average daily volume > 200k shares daily over last 50
days
-
> $5 price
-
Zacks Ranking <= 2 for those stocks with a market cap <
$10 billion and <= 3 for those with a larger market cap
-
PEG ratios based on one year growth rates for this year
and next must be greater than 0 and less than 1.5
-
Memberships in at least two screens from different
screen sources or in at least three from the same screen source.
The cross screening ensures that I'm going to trade only
those stocks with the best fundamentals, while the PEG ratio qualification
ensures that these stocks have value remaining at their current prices.
This list of stocks will form the basis for the daily TSM
picks over the next week:
-
Stock trades over the next 2-6 days
-
Selling Naked Puts (cash backed) for low risk, high
return investment over the next 30 days
-
Married Put Investment for very low risk, high return
investment over the next 6 months
