woensdag 27 april 2016

Stock Screener: Day 3: Euronav (EURN)

Correlation Economics has gone live with the Stock Screener Technique. I will post live podcasts on my channel here, maintain a "Stock Screener" portfolio and prove that this technique works! (if it turns out it doesn't work, I'll probably try something else)

Remember my post on KYNSIMOTAICYTYGEWZXIN, GIMB, ARG, HCI, LTA? All have been doing well. LTA has been appreciating 3%, 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 10-0.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: Euronav (EURN). This time I took a stock from Euronext Brussels.

I always say, buy a company that has earnings and this one has it. Euronav is in the tanker business. I know this is a very dangerous business at the moment as tanker rates can fluctuate a lot and we're practically going into a recession. But I also know Euronav is very cheap and it has earnings. If tanker rates stay the same, there is no reason for Euronav to go down in price. It has vessels in its fleet for about 3 years to come. Very nice earnings at a P/E of 5. Market cap is at around 2 billion USD. Share price has consolidated in the past year. Dividend is very high, it is around 10% dividend. Not very stable dividend, but yeah, this is a volatile business.  Is trading at 90% of book value, so valuations are cheap. I'm buying it. This is a nice value play. Let's go for 11-0.

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