Select stocks with value invester criteria

Screening Filters

1. Market cap category: large

   • Purpose: Focus on established, sizable companies.
   • Rationale: Large-cap stocks are often preferred by value investors because they tend to have more stable businesses, stronger balance sheets, and more reliable financial reporting than smaller, more speculative companies.

2. Net margin ≥ 10%

   • Purpose: Identify companies that keep a healthy portion of revenue as profit.
   • Rationale: A strong net margin suggests efficient operations and solid pricing power. For value investing, this helps avoid “cheap” stocks that are cheap for a reason and highlights businesses with durable profitability.

3. Return on equity (ROE) ≥ 12%

   • Purpose: Measure how effectively management uses shareholder capital.
   • Rationale: Value investors generally want companies that are not only inexpensive but also productive with the capital they retain. A higher ROE indicates the company is generating attractive returns on equity, which supports long-term value creation.

4. Free cash flow TTM ≥ 0

   • Purpose: Ensure the company is generating positive cash after capital spending.
   • Rationale: Positive free cash flow is important because earnings alone can be misleading. A value stock with positive free cash flow is more likely to be financially healthy, able to support dividends, reduce debt, or reinvest in the business.

5. P/E TTM ≤ 12

   • Purpose: Screen for stocks priced relatively cheaply versus their earnings.
   • Rationale: This is a classic value filter. A low price-to-earnings ratio can indicate the market is undervaluing the company compared with its profit generation.

6. P/B ratio ≤ 1.8

   • Purpose: Find stocks trading close to or below the value of their net assets.
   • Rationale: Value investors often look for companies available at a modest premium to book value. A low P/B ratio can signal undervaluation, especially when combined with strong profitability metrics like ROE and net margin.

7. EV/EBITDA ≤ 10

   • Purpose: Measure valuation relative to operating earnings and capital structure.
   • Rationale: This valuation metric helps compare companies more fairly by including debt and cash. A lower EV/EBITDA multiple suggests the company may be attractively priced relative to its core operating performance.

Why Results Match:

• Taken together, these filters are designed to find financially healthy large-cap companies that are profitable, cash-generative, and trading at relatively low valuation multiples.
• That combination is highly consistent with a value investing approach: looking for quality businesses at reasonable prices rather than high-growth or speculative names.
• The profitability and cash flow filters help avoid “value traps,” while the valuation filters target stocks that appear underpriced based on earnings, assets, and operating cash generation.