These are the Strong July Stock Picks

Strong July Stock Picks

Once a month, I talk about solid balance sheets. I talk about solid stock scores. I talk about the safest companies on valuation. You know I like using numbers to tell a story. So, don’t we take a look at the strong stocks right now and tell a story about what’s working well and what is not in the U.S. economy. As we head into the weekend, I have three metrics for you. The first two are the Piotroski F Score and the Altman Z Score. Then, I layer Perfect Score companies with a valuation rank to ensure optimal upside over the next 30 to 60 days.

Digging into the Numbers

Here’s what we’re looking at:

The F Score is a NINE-POINT system that rewards each company for meeting a specific criterion on its balance sheet. For example, if the company meets all nine criteria, it has an F score of 9.

The Z Score score is a tad more complex. This is a weighted average of five metrics to determine whether a company might go out of business. If a company falls below 2.5, it has a very 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. That figure allows me to be on the safe side and avoid any surprises. Why use these numbers? Because companies can’t fake them. They can’t like or manipulate their balance sheets. This is just good old-fashioned analysis. That seems to be lacking in these troubled times. And – if in a month either the F score falls to eight or lower, or the Z score drops under 3, I drop it off this list.

So, let’s take a look at the seven perfect companies this month.

Strong July Stock Picks

StockF ScoreZ ScoreValuation
AutoNation (NYSE:AN)94.23Fair
Semtech (NASDAQ:SMTC)99.08Fair
Quest Diagnostics (NYSE:DGX)93.81Fair
Rio Tinto PLC (NYSE:RIO)93.23Fair
Plexus Corp. (NASDAQ:PLXS)94.37Fair
Standard Motor Products (NYSE:SMP)94.04Fair
Weis Markets (NYSE:WMK)95.15Undervalued

What can we take away from this list of strong stock picks?

We’re still watching a red-hot auto industry, and we have a solid semiconductor stock in the middle of a pandemic (might be become a takeover target?)… there’s an ongoing need for diagnostics as we face another possible wave of this pandemic. We see strong balance sheets with a supermarket and an engineering firm. These are all vital industries represented, even in the face of a potential turndown in the market.

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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