Triple Play Screen (3/19/2013)

Photo Credit: Alan Cleaver via Compfight cc

A couple of people have requested a quick triple play screen in the last few days, so we’ll take a closer look.

Companies of Interest: Recent Round Table selection Vera Bradley (VRA) just toggled back to “Bullish” and with fundamentals intact, the price drop could be a sale vs. distressed merchandise. Kohl’s (KSS) was downgraded by JP Morgan this morning — so study carefully and monitor for impact on long-term trends. Coach (COH) continues to be challenged in a challenging retail environment but the news/expectations out of China have been quite good of late. United Health (UNH) has some of the stronger P/E expansion and margin enhancement potential on the list.

Keep in mind that the Triple Play screening criteria is generally most useful in the later stages of a bear market but the concepts are always valid.

Here are the three major Triple Play criteria:

  • Damaged stock price (Elevated return forecast)
  • Potential for profitability improvement (margin expansion)
  • Potential for P/E expansion

Using our stock database:

We begin by limiting the field to companies with Fusion Rankings (a combination of return forecast, quality ranking and technical factors) greater than 80.

We then limit the field to companies with (1) projected P/E ratios greater than current P/E ratios and (2) profitability forecasts greater than current profitability levels. P/E expansion and margin enhancement are both annualized in the results table.

The qualifying companies are sorted (descending) by MANIFEST Rank.

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