Here are December’s Perfect Stocks

Finding the Perfect Stock

Every month, I discuss market momentum and the most perfect stocks to start the month. However, December’s perfect stocks are quite unique. You see, market momentum is HIGHLY negative, and cash is your best friend at this moment.

When market momentum returns to positive conditions, you will be first to know. Despite today’s big moves and optimism about the Omicron coronavirus variant, it’s important to identify two positive trading days in a row for a start of momentum returning to the markets. 

With that in mind, it’s not a bad idea to start building a watch list right now for when it’s time to pour capital back into equities. You can start with this list. You see, I look at three different metrics to help build a list of winning stocks that are low-risk, high-upside stocks given their rock-solid balance sheets.  

This is the ultimate Do-It-Yourself lesson.

  • The Piotroski F-score 
  • The Altman Z-score
  • A valuation rank

I like to trade covered calls and cash-secured puts on these stocks.  

Let’s Talk About the Numbers

Let’s start by finding positive financial growth and low debt exposure – and the F-score tells both. The F-score is a NINE-POINT system that rewards each company for meeting a certain criterion on its balance sheet. If the company meets all nine criteria, it has an F-score of 9. 

The Z-score is a weighted average of five metrics to determine whether a company might go out of business. For example, if a company falls below 2.5, it has a risky balance sheet – typically due to large debt loads or weak cash flow. I prefer to target companies with a Z-score of 3 or higher. 

Remember, stocks with solid F and Z scores tell us RIGHT NOW what is working in the U.S. economy. You can’t fake performance when using forensic analysis. But we also want to make sure that these stocks are not overvalued by any metric.

December’s Perfect Stocks:

StockF-ScoreZ-Score
Matson (NYSE:MATX)93.39
Labcorp. (NYSE:LH)93.90
Quest Diagnostics (NYSE:DGX)93.96
Quidel Corp. (NASDAQ:QDEL)911.73
Smith & Wesson Brands (NASDAQ:SWBI)99.61
USA Truck (NASDAQ:USAK)93.02
Weyco (NASDAQ:WEYS)94.64
Hologic Inc. (NASDAQ:HOLX)94.18

With the new variant on the move, blood testing companies are looking stronger. We have a new addition in the trucking sector and strong movement in a logistics giant in Matson. There’s a lot to like here.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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