“You have a limited amount of time and talent and you have to allocate it smartly.”Charlie Munger, Warren Buffett’s business partner
By John Kingham
Stock screens are useful when your time is valuable
Stock screens are a great way to avoid having to analyse and understand the 600 or so companies in the FTSE All-Share.
If you’re looking for companies with an unbroken ten-year record of dividend payments (as I am) then that’s great; a stock screen can just filter out the 300 or so companies that don’t meet that standard.
The UK Value Investor stock screen does exactly that, as well as applying a range of other filters.
And once the filters are applied, it sorts the remaining companies (typically around 200 of them) by a handful of important factors that I and many other income-focused value investors are interested in.
The main factors that go into the stock screen’s unique ranking system are:
- Growth Rate – Measuring growth across revenues, capital employed and dividends per share over ten years
- Growth Quality – Measuring the consistency and sustainability of revenue, earnings and dividend growth over ten years
- Profitability – Measuring net return on capital employed (including leased capital such as retail stores)
- Debt Ratio: The ratio of ten-year average earnings to total debts (borrowings and lease liabilities)
- PE10 ratio – The ratio of share price to ten-year average earnings
- PD10 ratio – The ratio of share price to ten-year average dividends
If you want to know the rationale behind each of these factors, have a look at the underlying investment strategy.
If you want to see exactly how each of those factors is calculated, have a look at the free resources page. It contains spreadsheets which will help you calculate each factor for any company.
You can find the latest stock screen results in each issue of my monthly newsletter.
Interactive stock screen
As part of the monthly newsletter subscription service, subscribers get access to an online interactive version of the screen which is updated daily. You can also sort, filter and download the stock screen’s data as a spreadsheet: