Your June List of Perfect Companies – Let’s Dive In

Perfect Companies

Note all of the perfect companies on the list below. Buy the stock and sell covered calls to generate income. Sell puts to pick out your entry position. Or dollar-cost average these stocks so long as they remain on the list. You’re likely going to make money in any strategy that you choose.

I give this list away every single month. I know – for a fact – that there are people out there that sell this very simple strategy for thousands of dollars. They just hide it under some other name. Not me. I use this all the time. And I want you to learn it too. Because YOU can do this yourself.

Each month, I use three metrics to determine the best and safest stocks in the market. 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 that they provide optimal upside over the next 30 to 60 days.

Again, there are many ways to trade these companies. And since they all have rock-star fundamentals, you can build a nice portfolio and trade these stocks for big gains over the longer term.

Let’s Talk About the Numbers

Here is what I use.

The Piotroski 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 score of 9 signals improved fundamentals over the last 12 months across all categories. This is good news, my friends. I love a perfect score.

The Z-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. I HATE DEBT.

I love when companies have ample amounts of cash. And when a company doesn’t have debt, it means something else. If anything in the economy hits the “fan” – they can issue debt. It’s better to have a “break the glass” plan in place than having already broken the glass.

Why are these numbers important? Because it tells us RIGHT NOW what is working in the U.S. economy.

You cannot fake the performance when you engage in this level of forensic analysis. These numbers matter. 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.

Oh, and I really want to have a positive valuation rank or valuation that is attractive in comparison to its peers.

Perfect Companies for June

TickerCompanyPriceValuationRiskF-ScoreZ-Score
CACCCredit Acceptance Corp.$443.64UndervaluedLow Risk93
DGXQuest Diagnostics$132.56Fair ValueLow Risk93.79
NAIINatural Alternatives International$14.40Fair ValueLow Risk94.32
SMPStandard Motor Products$45.14UndervaluedLow Risk94.08
WMKWeis Markets$49.81Fair ValueModerate Risk95.13

What can we take away from this list?

Well, CACC is an auto credit company, and right now the auto sector is under pressure. Car prices are going higher, and CACC is benefiting.

DGX – or Quest – continues to remain in a very solid pattern. People have been getting COVID tests, and now they’re returning to ensure that they get tested for things they’ve held off on for months. This firm really cleaned up its balance sheet over the last few months. And it remains a low risk play for the months ahead.

NAII – I have no clue why this company is on the list. I do know that O.J. Simpson used to be a paid spokesman. But I’m not focused too much here. It sells vitamins and minerals. Good market right now.

SMP is benefiting from the auto sector, and Weis Markets operates in a very simple world of selling food. It has a little more risk, but it has an incredible balance sheet.

This week, I’ll teach you how to engage in something called a poor man’s covered call. These are the types of stocks that I like to use options on to maximize gains. And there’s a pretty simple way to do it.

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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