September 2022 Perfect Stocks (Use Caution)

September 2022 perfect stocks

Market momentum is Yellow. The S&P 500 is fighting to maintain the 4,000 level, and the index has been strong despite low volume conditions. There is ample reason to speculate a bit, but there are other ways to profit over the long term. We talk about the top stocks with great balance sheets today.

How do we trade the best stocks? Cash secured puts and credit spreads offer you great potential as you dip a toe back into the market. If you’ve followed me over the last few weeks, I’ve written extensively about these trades and told you the momentum indicator after every single trading session.

The stocks that I am discussing are ones built for long-term rebounds and breakouts. You can also position size into these stocks over the months ahead… I look at three different metrics to help build a list of winning low-risk and high-upside stocks, given their rock-solid balance sheets. This is the ultimate Do-It-Yourself lesson.

Start right here: 

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

Here’s How It Works

Let’s start by finding positive financial growth and low debt exposure. That’s where the Piotroski F-Score succeeds. 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. That means it’s perfect.

The Altman Z-Score is a weighted average of five metrics to determine whether a company might go out of business. If a company falls below 2.6, it has a risky balance sheet. That risk is tied to a balance sheet that likely has lots of debt or weak cash flow. We are looking for stocks with a Z-Score of 3 or higher. 

This is pure forensic analysis. But let’s add one last element to this. We want our stocks to have attractive valuations. And we don’t want to trade at 15 times sales or 30 times revenue. We also don’t want to have negative book value or negative EBIT. So, we aim for stocks with attractive buyout values. I use EV/EBIT to allow us to have a proper “apples to oranges” comparison today. I’ll keep the number at roughly 7 or less.

The List September 2022 Perfect Stocks

Okay… Here are your top F and Z score stocks for September. 

StockF-ScoreZ-Score
CF Industries (CF)94.56
Huntsman Corp. (HUN)93.12
CVR Energy (CVI)93.01
Matson (MATX)94.16
CVR Partners (UAN)93.21
Photronics (PLAB)93.80

There are some beaten-up stocks on this list after our negative momentum switch back in late August. Now, there’s an opportunity in the next two weeks should momentum remain stronger. Think about trading (selling) out-of-the-money puts here…

Why deep out-of-the-money? If the stocks go higher, you’ll make money. You’ll make money if the stocks don’t reach the strike price. And if the stock falls to the strike price, you’ll get a great stock at a much cheaper valuation than today. Remember, you’re picking a level where you’d be happy to buy the stock… It’s “win, win, win.”

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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