vrijdag 11 maart 2016

Stock Screener: Take 9: HCI: HCI Group

Remember my post on KYNSIMOTAICYTYGEWZXIN, GIMB, ARG? All have been doing well. ARG has given a handsome dividend of 4%/year while appreciating 10%, I'm amazed how well this stock screener idea works. I'm still keeping this stock in my portfolio as it is undervalued and can continue to rise, but let's go to another stock for our readers.

Track record 8-0.Time to move on.

If I don't have any ideas anymore what to buy, I use the stock screener.

What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change.

1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion.

2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth.

3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money to pay out dividends on a regular basis. I'd go for companies with dividends between 3% and 7%.

4) Volatility: don't choose companies that are so volatile. Maximum year over year change should be between the 20% range.

We use the exact same parameters as above and our next winner is: HCI Group (HCI). This time I took a stock from the NYSE.

I always say, buy a company that has earnings and this one has it all. Very nice earnings around 4 dollars a share a year, which means a P/E of 7, not too shabby but it's ok in this world of high equity valuations. I will make an exception on the P/E ratio today (outside the range of 2-5). Market cap is at 300 million USD. Share price has fallen in the past year. Dividend is increasing in time, it is around 3-4% dividend. Dividend is also stable, they started to pay out already many years ago. Is trading at around book value, so valuations are normal. The company will also buy back 20 million USD in shares, which is almost 10% of market cap. 20% of shares are insider held. I'm buying it. Technically, the stock has bottomed out. This is a nice dividend generator. Let's go for 9-0.

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