The results of ValueWalk’s growth screen for July.
Using data is provided by Winvestor, the business analysis, and stock valuation website, we’ve put together a proprietary growth screen to help you select the best growth stocks in the current market.
Winvestor uses financial data from Thomson Reuters to identify undervalued, valuable gems that every investor is looking for. The site’s ‘Growth Ranking’ uses a proprietary screen to scan stocks using more than ten different growth criteria, and then arrives at a final score somewhere in the range of 0 to 100. Each stock is ranked based on its score with 100 being the most undervalued growth stock and 0 being the most overvalued.
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The growth screen tries to weed out the companies with the most sustainable growth rates. For example, quality growth is sustainable growth and earnings should be of high quality, with operating cash flows exceeding operating income and net income. An example of low-quality and unsustainable growth is growth through acquisitions. Growth rates can also be skewed by large one-time gains or losses that are causing the bottom or top lines to be depressed or inflated.
Growth screen: Financial health
Along with growth, Winvestor includes a screen for the best financial health. Once again, this ranking includes a number of different screening criteria, including debt, or solvency ratios and working capital ratios, including but not limited to the current ratio and cash conversion cycle. Each company is given a financial ‘Health Rank‘ between 0 to 100 and ranked accordingly.
Winvestor’s screens cover a universe of over 38,000 companies in 130 countries (representing over 99% of world market capitalization). However, to try and root out the best opportunities for investors, in this article the screen has been limited to US corporations with a market capitalization of $2 billion or more.
The top ten companies with the highest Growth Rank are shown below. Financial stocks are excluded. The screen filters out companies with a P/E of more than 15. These are the results of the screen as of before market open 07/29/2015.
(click to enlarge)