Since 2009, GuruFocus has implemented an eclectic variety of value screeners to help investors find good value opportunities around global stock markets. The value screeners can also offer insights on global market valuations and the predictability of companies. Additionally, we can study the value screener record trends to determine which sectors have good value potential in early 2017.
The value screener record for global companies
Based on the investing strategies implemented by Benjamin Graham, Peter Lynch, Warren Buffett (Trades, Portfolio) and Walter Schloss, the GuruFocus value screeners list global companies that offer good value to investors. Table 1 summarizes the number of companies making the value screeners grouped by region.
| Value Screener | USA | Canada | UK / Ireland | Europe | Asia | Oceania | Latin America | Africa |
| Ben Graham Net-Net | 171 | 71 | 43 | 244 | 616 | 27 | 7 | 9 |
| Undervalued Predictable | 48 | 8 | 18 | 62 | 30 | 6 | 24 | 7 |
| Buffett-Munger | 32 | 3 | 14 | 41 | 53 | 1 | 9 | 5 |
| Historical Low P/S | 18 | 0 | 7 | 28 | 42 | 1 | 15 | 1 |
| Historical Low P/B | 19 | 1 | 9 | 34 | 50 | 3 | 18 | 4 |
| Peter Lynch Growth | 20 | 5 | 20 | 70 | 82 | 4 | 17 | 12 |
| Walter Schloss | 19 | 8 | 59 | 67 | 365 | 17 | 5 | 5 |
| Strong Stocks '17 version 1 | 15 | 2 | 6 | 20 | 7 | 2 | 6 | 1 |
| Strong Stocks '17 version 2 | 5 | 1 | 6 | 11 | 3 | 1 | 2 | 0 |
Table 1: Value Screener Record as of Feb. 6, 2017
The high number of Ben Graham Net-Net stocks in the Asia region suggests Asian stock markets are still significantly undervalued. As illustrated in Figure 1, several Asian stock markets offer a projected annualized market return of over 15%: Singapore, Russia, China and India. The majority of Asian net-nets are in the technology sector as illustrated in Figure 2.
Figure 1
Figure 2
Predictable companies by region and sector
The GuruFocus Business Predictability Rank distinguishes the good companies from the poorer ones as it measures how consistent a company’s revenue and earnings growth has been over the past 10 years. Among the value screeners, at least four of them require a predictability rank of at least four stars: the Undervalued Predictable Screener, the Buffett-Munger Screener and the two historical low valuation screeners. A previous article discussed sports retailer Hibbett Sports Inc. (HIBB, Financial), a company that made all four screeners listed above.
As illustrated in Figure 3, the consumer cyclical sector has the highest number of undervalued predictable / Buffett-Munger companies, especially in Europe and the U.S. Fifteen Asian financial services companies made the Undervalued Predictable Screener, the largest cluster of stocks from Figure 3.
Figure 3
Figure 4 details the number of predictable companies trading at historical low valuations. Across the regions, Asian companies have higher value potential, especially financial services companies. Fourteen Asian financial companies trade near historical low price-book ratios while eight trade near historical low price-sales ratios. One Chinese bank, Ping An Bank Co Ltd. (SZSE:000001, Financial) made both historical low valuation screeners as of Feb. 6, 2017.
Figure 4
As discussed in a previous article, I generated a value screener based on Lynch and Buffett’s investing strategies. Table 2 compares the value screener I explored in the article to two versions that do not use customized filters.
| Strong Stocks 2017 Screener | Modified Screener 1 | Modified Screener 2 |
| Market Cap at least $500 million | Beneish M-score less than -2.22 | Beneish M-score less than -2.22 |
| Predict rank at least 4 stars | Predict rank at least 3.5 stars | Predict rank at least 4 stars |
| Gross margin at least 40% | Gross margin at least 40% | Gross margin at least 40% |
| OMG rate at least 2% | OMG rate at least 2% | OMG rate at least 2% |
| 10y revenue growth at least 10% | 5y revenue growth at least 10% | 5y revenue growth at least 10% |
| PEGY less than 2 | PEG less than 2 | PEG less than 2 |
| FCF yield at least 5% | Yacktman ROR at least 5% | Yacktman ROR at least 5% |
| Ă‚ | Ă‚ | Greenblatt ROC growth 5% |
Table 2: All versions of the Strong Stocks 2017 Screener exclude over-the-counter stocks.
Figure 5 shows the number of stocks that made one of the two modified versions of the Strong Stocks 2017 Screener. Across the sectors, version 1 of the Screener generally produced more stocks than Version 2 did. European health care companies represent the majority of strong stocks for 2017.
Figure 5
Several U.S. companies made at least three of the “predictable value screeners,” including Hibbett, AmTrust Financial Services Inc. (AFSI, Financial) and NIC Inc. (EGOV, Financial). Two companies, Novo Nordisk A/S (NVO, Financial) and Winmark Corp. (WINA, Financial), made the Undervalued Predictable Screener, the Buffett-Munger Screener and the two modified versions of the Strong Stocks 2017 Screener.
See also
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Disclosure: No positions in the stocks mentioned.
