Getting Growth And Value

6/25/2012


The Forecasts loves value stocks. We also love growth stocks. But our favorites are companies that deliver both.

Academic and our own research shows that stocks with low valuations tend to outperform, while stocks delivering high profit growth also tend to outperform. Growth has dominated recently, with the S&P 1500 Growth Index outperforming the Value Index in four of the last five 12-month periods from June 2007 through May 2012. However, value set the pace for the previous four years.

Fortunately, you don't have to predict which strategy will win. Our Quadrix system can identify stocks with both growth and value characteristics. The Value score considers 20 valuation ratios, while the Momentum score reflects recent growth in such operating metrics as sales, profits, and cash flow.

In our quest for growth and value, we screened for recommended stocks with solid (at least 70) Value and Momentum scores, as well as Overall scores of at least 90, suggesting they are strong in other areas as well. Fewer than 6% of U.S.-traded stocks met our criteria — including the six recommendations├é┬álisted below.

SCREEN OF THE MONTH
--------- Quadrix Scores ---------
Company (Price; Ticker)
Momen-
tum
Value
Overall
AGCO ($43; AGCO)
74
96
97
Apple ($587; AAPL)
99
70
100
CF Industries ($181; CF)
91
95
100
DirecTV ($46; DTV)
86
88
97
Oracle ($28; ORCL)
81
77
93
Wells Fargo ($33; WFC)
70
81
90

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