Thursday, January 24, 2008
James O'Shaughnessy - Cornerstone Growth Screen
Since our last post on James O'Shaughnessy's Tiny Titans was so popular, we figured it's time to feature another one - The Cornerstone Growth Screen. We have used performance history from AAII, American Association of Individual Investors.
James O'Shaughnessy's Cornerstone Growth is a mechanical stock screen that uses several factors to find winning stocks:
Price/Sales ratio less than 1.5
1 year EPS growth > 0
3 months relative strength > 50
6 months relative strength > 50
Ranking: 12 months relative strength
Here's the Market Crushing returns from AAII's website (one caveat: it's possible that the AAII screen may differ slightly):
2007: 12.6 - as of 11/30/07
The lazy investor's option: Buy HFCGX, a mutual fund from Hennessy which follows this strategy.
Here's a performance summary from Smartmoney's website. As you can see, it crushes the S&P 500, especially in the bear market years.
Here's Hennessy Funds website, which features HFCGX and others.