Screening For Black Friday Bargains In The Stock Market

Benzinga · Dec 3 22:21

Screening For Bargains On Black Friday

Since American retailers traditionally offer deals on the day after Thanksgiving ("Black Friday"), it seemed fitting to see if the stock market was offering any too. The main metric I used to screen for deals was Chartmill's overall valuation rating. I used that, because it incorporates several measures of valuation, including Price/Earnings (P/E), Forward P/E, Price/Book, and PEG (P/E divided growth rate).

Setting Up The Screen

To make sure I wasn't picking up a bunch of "cheap for a reason" stocks, I added a few other technical and fundamental metrics to the screen:

Trades in U.S.
Has options.
Valuation rating >=7.
Technical rating >=6
Set-up rating >=6
Growth rating >=6
Profitability rating >=6
Piotroski F-Score >=8

The technical and valuation ratings are self-explanatory; the set-up rating measures the short-term consolidation of share prices. Each of those ratings is on a scale of 0 to 10, with 10 being best; the Piotroski F-Score is on a scale from 0 to 9, with 9 being best.

The Results

That screen yielded these four names:

Neurocrine Biosciences, Inc. (NASDAQ:NBIX)
United Therapeutics Corp. (NYSE:UNH)
Supernous Pharmaceuticals, Inc. (NASDAQ:SUPN)
Expedia Group, Inc. (NASDAQ:EXPE)

Are These Stocks Worth Buying Now?

Maybe, but they're probably not the best stocks to buy now. The best stocks typically aren't cheap. In a recent post ("The Post That Just Saved Us Money On Nvidia"), I mentioned that I'd consider placing a bullish options trade on Nvidia Corporation (NASDAQ:NVDA) again when it had a valuation rating of 6. I didn't say a valuation rating of 7, because as long as the AI story continues, I don't expect Nvidia to trade that cheaply. It may not even trade at a valuation rating of 6 in the near future, outside of a major market correction. Maybe it's not worth waiting for one.

The Valuation Ratings Of Portfolio Armor's Top Ten Names

On Wednesday, I posted Portfolio Armor's top ten names. Those are the ones are system estimates will have the highest returns over the next six months, net of hedging costs.

Occasionally, we see some inexpensive stocks on that list (valuation ratings of 7 or so), but this week. The average valuation rating of the stocks in Wednesday's top ten was 2.7. The overall top name, Tesla, Inc. (NASDAQ:TSLA), had a valuation rating of 4.

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