Every month, I discuss market momentum and the strongest stocks to start the month. I focus on two financial metrics to identify solid companies with extremely strong balance sheets and low probabilities of default. I also look for solid valuation ranks to ensure that November’s perfect stocks are ideal ways to trade this month.
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. But first…
The Numbers to Discover November’s Perfect Stocks
We want a story of positive financial growth and low debt exposure – and the F-score tells it. 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.
November’s Perfect Stocks:
|BHP Group (NYSE:BHP)||9||3.61|
|SEI Investments (NASDAQ:SEIC)||9||17.82|
|Quest Diagnostics (NYSE:DGX)||9||3.89|
|Smith & Wesson Brands (NASDAQ:SWBI)||9||9.71|
|SIGA Technologies (NASDAQ:SIGA)||9||21.81|
|Natural Alternatives (NASDAQ:NAII)||9||4.41|
|Hologic Inc. (NASDAQ:HOLX)||9||4.13|
We’ll talk about how to trade these stocks and a few examples starting next week. You can’t fake performance. You’ll love these strategies.