Guru Investor Strategies

Graham :

• P/E no greater than 15.
• P/E x P/B not exceed 22
• Current ratio < 2, less than 2 is utility or telecom
  
• Long term debt < Value of the Assets ( Net current assets )
  
• Sa;es > 340M
  
• 30 to 50% below real value
• 10 years EPS growth >30%
• Total debt/equity ratio < 100% , Utilities,phone, railroads <230%
• Continue Dividend

John Neff :

• P/E >40% of market average < 60% of market average
• EPS growth >7%<20%,
  
• Futures EPS growth rate >6% current year AND >6% for long term
• Sales growth > 70% of EPS growth rate, <70% of EPS growth rate but >7%
• Total return/P/E > ( Market total return/P/E) x2, or > ( Industrial total return/ P/E) x2
• Free cash flow > 0
• EPS by quarter ( Q1 most recent q, Q5= 5 q ago), Q1>Q5 and Q2>Q6, and Q3>Q7, and Q4>Q8

David Dreman :

• P/E in bottom 20% of the market
• Price/Cash flow ratio in bottom 20% of market
• Price/Book Ratio in bottom 20% of market
• Price/Dividend Ratio in bottom 20% of market
• Market cap among 1,500 largest publicly traded stocks
• EPS Q1 >EPS Q2
• EPS growth in the immediate past and future, EPS growth from Q3 to Q1 > S&P 500 growth Q3 to Q1 and projected growth for this year > S&P 500 growth for this year
• Current ratio > Industry average or > 2
• Payout ratio < average historical payout ratio
• ROE > 27% or top third of 1,500 largest -cap stocks.
• Pre tax margin > 22% to 8%
• Yield > Dow yield +1 %
• DEbt to Equity ratio =0 but <20%

Warren Buffet:

• Earning Predictability ( Y1 most recent years, Y10 10 years ago), Y1>Y2>Y3>Y4...Y10 and no years with negative EPS ( A dip from a prior year's earning that no more than 45% , also acceptable but o years negative EPS)
• Long term debt < 2 times earning or <2 < 5
• ROE ( Average over the last 10 years) > 15%
• Return on Total capital ( ROTC ) > 12%
• FCF >0
• Utilization of RE, return of Retained Earning > 15% or >12<15%
• Initial Rate of Return ( Earning Yield ) = EPS/P, > long term T-bond yield)
• Return on equity >15% or >12<15%
• EPS growth >15% or >12%<15%
• Average final return ( Expected ROE+ Expected EPS)/2 >15% or >12%<15%

Peter Lynch:

• PEG and Yield adjusted PEG>0<0.5 or >0.5<1
• Change in Inventory , financial or Service Co not applicable,change in inventory/sales is negative or zero or positive but less than 5
• Total debt-Equity ratio financial or Service Co not applicable,D/E < 30%, or >30<50%, or >50<80%
• For Financial stocks : Equity to Asset Ratio > 5% or >13.5%. ROA > 1%
• P/E for fast Growers, Sales >$1 billion and PE < 40
• EPS growth for fast growers > 20<25% or >25<50%.
• Stalwarts ( Earning growth 10 to 20% and annual sales $2billion or more ). EPS >0
• Yield > S&P yield and > 3%
• Bonus Criteria: FCF to Current ratio > 35%
• Net Cash per share to Current Ratio >30<40% or >40<50

Kenneth L Fisher:

• Price/Sales Ratio, Noncyclical and Tech stcoks : PSR < 0.75, PSR >0.75<1.5 are good vale. Cyclical stocks : PSR <0.4. > 0.4<0.8 are good value.
• Total debt/equity ratio <40%
• Price/Research Ratio <5 best, >5<10 Pass, >10<15 ok.
• Price/Sales for super stock, Noncyclical and Tech <0.75, Cyclical <0.4
• Inflation adjusted EPS growth > 15%
• FCF > 0
• 3 years ave net Profit Margin > 5%

Martin Zweig:

• PE Ratio >5 and <43 and <3x Market PE
• Revenue growth >85% of EPS growth or Revenue growth > 30% per year
• Current EPS >0
• EPS for quarter one year ago >0
• Growth from Q1 to Q5 >0
• Annual Earning Persistance , Y1>Y2>..Y5.
• Earning growth for past 4 quarter compare with previous year quarter must > 50%
• Long term EPS growth > 15 Pass or > 30% best case
• Growth Q5 to Q1 >30% and > Historical growth rate
• D/E < Industrial average
• Insider sell = 0 AND buy > 3

James O' Shaughnessy

• Market Cap >$ 150M
• EPS Persistance , Y1>Y2>.....Y5
• PSR <1.5
• In top 50 stocks of passing the three criteria

Value Strategies

• Market Cap >$ 1billion
  
• Cash flow per share > Market average cash flow/share
  
• Share outstanding > Market average shares outstanding
  
• Trailing 12-Month sales > ( Market average sales (TTM)) x 1.5
• Dividend Yield in top 50 passing the previous four criteria

Joel Greenblatt:

• Determine Return on Capital ( Earning before interest and taxes)/(Net working capital + Net Fixed asset)
• Determine Earning Yield ( Earning before interest and taxes)/( Enterprise value)
• ROE + EY among 20 lowers of eligible stocks

Joseph Piotroski:

• B/M in top 20% of market
• ROA >0
• ROA most recent year>ROA previous year
• CF>0
• CF from operation > Net income
• LTD/A for most recent year < previous year
• CR recent year> previous year
• Number of share outstanding in most recent year < previous year
• GM recent > previous year
• Asset turnover recent > previous year

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