I’m sitting in my hotel in Germany right now with a serious issue. You see, I live in Florida, where it’s always hot and always sunny. Yet, I lack a good tan. But while doing some camera work today outside in Frankfurt, Germany, I got A LOT of sun. Seriously, I flew 5,000 miles to get a sunburn. I also had quite an experience getting to Bonn on Tuesday. It reads like the plot to Planes, Trains, and Automobiles. I’ll be sure to share it tomorrow. But before we get into my misfortunes on the trains, I need to talk about perfection. I use three metrics to determine the best and safest stocks in the market once a month. And I give to you seven August perfect companies as a benefit of being a Haven Investment Letter reader.
Yes, some publications charge money for this type of analysis. But I want you to be able to do this yourself. So let’s dive in. We use these three metrics:
- The Piotroski F-score
- The Altman Z-score
- A Valuation Rank
Let’s Talk About the Numbers
I want to ensure that the numbers tell a story of positive growth. The F-score is a NINE-POINT system that rewards each company for meeting a certain criterion on its balance sheet. For example, 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 hate surprises, so 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 cannot fake the performance when using forensic analysis. So, let’s look at the seven perfect companies this month.
|SEI Investments (NASDAQ:SEIC)||9||4.17|
|Quest Diagnostics (NYSE:DGX)||9||3.88|
|Industrias Bachoco (NYSE:IBA)||9||4.22|
|Weis Markets (NYSE:WMK)||9||4.82|
|Standard Motor (NYSE:SMP)||9||5.49|
|Natural Alternatives (NASDAQ:NAII)||9||3.44|
What can we take away from this list?
Medical technology is improving in demand because people are going back for elective procedures. For example, diagnostics and blood testing are big business right now, and with K-12 testing happening, Quest continues to chug ahead. And there’s the automotive company that is benefiting from the shortage of replacement parts.
These are the types of stocks that I like to sell covered calls on. I want to trade Poor Man’s Covered Calls. And I like to dollar cost average them should they drop in price. You can’t fake performance. This list is rock solid.