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Sunday, January 25, 2009

Two custom screens yield picks from the oil patch

This post looks at the results of combining several of the stock screens that we ran this weekend at TradeRadar.

We executed the usual weekend Alert HQ process (read about this weeks results) and generated several lists of stocks based on our special screens including: Bollinger Band Breakouts, Trend Leaders and Cash Flow Kings (you can download these lists at the Trend Leaders page).

Trend Leaders represents a collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. To obtain the list of Cash Flow Kings we calculate the free cash flow yield of all the stocks we scan and pick the ones whose yield is 50% or greater.

The "Leadership Screen"

All these screens generate big lists since we run them against essentially the entire stock market. Combining the Trend Leaders and the Cash Flow Kings results in what I think of as the "Leadership Screen" as it brings together those stocks with price momentum and exceptional cash flow yield.

With the market down, this list is quite reduced from what we saw last week - only two stocks made the grade. The list is as follows:

SymbolNameExchangeLast PriceMarket Cap
SUAISpecialty UnderwritersNGM3.6456.7M

It seems refiners are doing well lately as last week we had Tesoro (TSO) on the list. This week it is Western Refining (WNR). Looking at this stock's financial ratios, one would not say this stock is particularly undervalued; however, the chart is extremely attractive (looking at it over a two period it looks like a nice bottom has formed and it has now jumped over its 200-day moving average) and it is comforting to see that it's one of our Cash Flow Kings.

Chart of WNR, 01-23-2009
Micro-cap stock Specialty Underwriters (SUAI) is the only repeat from last week and rounds out our short list. This brevity reflects the decline in the number of stocks on the Trend Leaders list as major stock averages fell anywhere from 2.1% to 4.7%

The "Contrarian Screen"

The next table shows the results of combining Cash Flow Kings with this week's Alert HQ SELL signals based on daily data. I think of this as the "contrarian screen" as it combines stocks with strong cash flow and falling prices. Here we have three stocks:

SymbolNameExchangeLast PriceMarket Cap
ICTGICT Group, Inc.NGM4.0664.6M
LIONFidelity SouthernNasdaqNM3.0028.5M
TGETGC Industries, Inc.NasdaqNM2.2138.4M

The best of this bunch is probably TGC Industries (TGE) which is in the oil and gas exploration services business. They have little debt and their financial ratios are all pretty favorable. This could be a nice longer-term value play. The chart below shows that the stock has fallen back to its 50-day moving average. It could get cheaper from here.

Chart of TGE, 01-23-2009
If you'd like to download the whole list with added fundamental data you can use this link. There could be a few stocks here that you will want to add to your watch list.

Disclosure: none


DG said...

I like WNR, having shown it up week after week, on technical screen after technical screen. The proprietary indicators I run on it show just such leadership, but I think a dip is possible.

Good Job guys.


TradeRadarOperator said...

Yes, a dip to slightly below the 200-day moving average is likely. As long as gasoline prices keep increasing and oil prices are contained, WNR should be be a real winner.

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