No. of Recommendations: 8
It is semi off topic, because these screens are to find a list of stocks to examine, not to trade.
1. Rapid-Compounders (Large & Mid-Cap)
Filter Setting Why it matters
Market-cap ≥ US $2 bn Avoid nano-caps & thin liquidity
FCF CAGR (5 yr) ≥ 25 % Demonstrates sustained cash-flow acceleration
FCF margin trend Positive Δ 3 yr Scaling efficiency, not just revenue growth
Net Debt / EBITDA ≤ 0.5 × (or Net Cash) Balance-sheet strength
Interest-Coverage ≥ 10 × Comfortable debt service
Altman Z-Score ≥ 3 Low bankruptcy risk
EV / FCF ≤ 25 × Keeps valuation under control
Relative Strength (6 mo) ≥ 70 Confirms market is rewarding FCF growth
Use this when you want big, durable cash generators that are still priced sensibly.
________________________________________
2. Quality-Value Compounders
Filter Setting Why it matters
Market-cap ≥ US $500 m Broader universe—including smaller names
FCF CAGR (5 yr) ≥ 15 %
ROIC ≥ 15 % High returns signal competitive moat
Piotroski F-Score ≥ 7 Robust fundamental momentum
Net Debt / EBITDA ≤ 1 ×
Current Ratio ≥ 1.5
FCF Yield (FCF ÷ Enterprise Value) ≥ 5 % Cash return vs. price
EV / EBITDA ≤ sector median and ≤ 15 × Double-check against peers
PEG-Ratio (P/E ÷ EPS-growth) ≤ 1.5 Classic value-growth balance
Ideal for investors who want growth at a reasonable price with quality safeguards.
________________________________________
3. Small-Cap Cash Rockets
Filter Setting Why it matters
Market-cap US $300 m – US $3 bn Focus on nimbler firms
FCF CAGR (3 yr) ≥ 30 % Very rapid recent growth
Cash & ST Investments – Total Debt ≥ 0 (i.e., Net Cash) Fortress balance sheet
Current Ratio ≥ 2
Interest-Coverage ≥ 6 ×
EV / FCF ≤ 15 × Valuation buffer
EV / Sales ≤ 4 × Extra sanity check vs. revenue
Insider Ownership ≥ 5 % Alignment of incentives
20-Day Avg. Daily $ Volume ≥ $2 m Tradable liquidity
Great for finding earlier-stage compounders that haven’t been fully rerated yet.
1. “Hyper-Compounders” Screen
Goal: Isolate companies whose free cash flow (FCF) and returns are compounding at venture-like rates without the venture-like leverage.
Metric Threshold Why it matters
5-yr FCF CAGR ≥ 25 % Identifies businesses whose cash generation is accelerating, not just rebounding.
Latest FCF margin ≥ 15 % Screens out revenue-grown-only stories with thin margins.
ROIC (TTM) ≥ 15 % Ensures they convert invested capital into value creation.
Net-Debt / EBITDA ≤ 0.5 × (or ≤ 0 for net-cash) Keeps leverage at bay; leaves headroom for reinvestment.
Interest-Coverage (EBIT ÷ Interest) ≥ 8 × De-risks rising-rate environments.
Implementation tips in SIP:
• Create a custom calculated field for 5-yr FCF CAGR:
=((FCF_ttm / FCF_5yr_ago)^(1/5))-1
• Use ’Return on Inv. Capital’ pre-defined item; set ≥ 15.
• Net-Debt is simply Total Debt – Cash & Equivalents.
________________________________________
2. “Quality-at-a-Reasonable-Price (QARP) Cash Engines”
Goal: Marry rapid FCF growth to sensible valuations so you’re not over-paying for greatness.
Metric Threshold Why it matters
3-yr FCF per Share CAGR ≥ 20 % Share-count-adjusted growth filters out buyback illusions.
ROIC 5-yr Avg ≥ 12 % Smooths cyclical spikes, focuses on repeatability.
FCF Yield (FCF ÷ EV) ≥ 4 % Puts a floor under valuation.
EV / EBIT ≤ 15 × Adds a second relative-value guardrail.
Current Ratio ≥ 1.5 Enough near-term liquidity to ride out shocks.
Debt-to-Equity ≤ 0.5 × Low structural leverage.
Implementation tips:
• Both FCF yield and EV/EBIT exist in SIP’s Valuation menu.
• For the 5-yr average ROIC, use SIP’s rolling average function, or export to Excel and average the last 20 quarters.
________________________________________
3. “Cyclical Turnarounds to Cash Machines”
Goal: Catch industries that just turned the corner—big jumps in FCF but still un-loved.
Metric Threshold Why it matters
YoY FCF Growth Positive in ≥ 2 of last 3 yrs and ≥ 30 % 3-yr CAGR Signals a durable inflection, not a one-off spike.
ROIC (TTM) ≥ Industry Median + 20 % Must now out-earn peers, proving the fix is real.
Net-Debt / Equity ≤ 0.2 × —or net cash Keeps the turnaround from being debt-funded.
Altman-Z Score ≥ 3 Screens out hidden distress risk.
Revenue CAGR 3-yr ≥ 10 % Confirms growth isn’t purely cost-cutting.
1. “Young Rockets—Revenue First, Debt Last”
Metric Threshold SIP Menu / Formula Rationale
YoY Revenue Growth (TTM) ≥ 40 % Growth → Sales % Chg Captures top-line acceleration.
Gross Margin (TTM) ≥ 30 % Profitability → Gross Margin Screens out low-quality blitzscalers.
Operating Cash-Flow Margin (TTM) ≥ 5 % Cash Flow → OCF ÷ Sales Insists on early cash-flow discipline.
Net-Debt / EBITDA (TTM) ≤ 0.5× (or < 0) Total Debt – Cash ÷ EBITDA Keeps leverage modest while scaling.
Current Ratio ≥ 1.5 Liquidity
Near-term shock absorber.
Why this screen? — Ideal for spotting software or health-tech IPOs that are still reinvesting but already run with positive unit economics and little leverage.
Added valuation filter Threshold Why this works for pre-profit names
EV / Sales (TTM) ≤ 10× Growth SaaS averages ~6–8× in 2025; 10× gives headroom but removes the 90-100th-percentile flyers.
EV / Gross Profit (TTM) ≤ 25× Controls for margin quality—cheap gross-profit is rarer than cheap revenue.
EV / Sales vs. Industry Median ≤ 2× Relative sanity check—keeps sector reratings from sweeping everything out.
(Custom field) EV/Sales_TTM ÷ Industry_EV/Sales_TTM
________________________________________
2. “Early-Profit Breakouts—Positive EPS Within 8 Quarters”
Metric Threshold SIP Menu / Formula Rationale
EPS (Most Recent Q) > 0 Earnings → Diluted EPS Shows the inflection to GAAP profit.
EPS YoY Growth (MRQ) ≥ 25 % Growth → EPS % Chg Momentum after the profit turn.
Free-Cash-Flow Yield (FCF ÷ EV) ≥ 3 % Valuation Ensures cash generation, tempers hype multiple.
ROIC (TTM) ≥ 10 % Profitability → Return on Invested Capital Capital productivity, even at an early stage.
Altman-Z Score ≥ 3 Risk Filters out brewing distress signals.
Why this screen? — Targets recent IPOs that have crossed the profitability chasm and may rerate as “quality compounders.”
Focus on earnings-linked ratios plus a cash-flow floor:
Added valuation filter Threshold Reasoning
PEG (Forward 1-yr) ≤ 2.0 Classic rule-of-thumb cut-off for “growth at too high a price.”
Custom: (P/E_Fwd1) ÷ EPS_3yr_CAGR.
EV / EBIT (TTM) ≤ 20× Caps multiple expansion bets; 75th-percentile S&P ex-Fins 2025 ≈ 19×.
Free-Cash-Flow Yield (FCF ÷ EV) ≥ 2 % Requires at least a trickle of owner cash return.
________________________________________
3. “Cash-Rich Disruptors—Net-Cash Balance Sheets”
Metric Threshold SIP Menu / Formula Rationale
Net-Cash Position ≤ 0 (i.e., cash > total debt) Total Debt – Cash and Equiv. Fortress balance sheet for reinvestment.
3-Qtr Sequential Revenue Growth ≥ 8 % each qtr Custom: (Rev_q0/Rev_q-1 – 1), repeat Sustained acceleration, not a one-off IPO bump.
R&D-to-Sales (TTM) ≥ 10 % Expense Structure Indicates reinvestment in moat building.
Share-Based Comp ÷ Sales ≤ 8 % SBC/Revenue (custom) Limits dilution risk that plagues new listings.
Quick Ratio ≥ 1.2 Liquidity Tightens liquidity screen when net-cash already high.
Why this screen? — Finds early-stage platform businesses (e-commerce, SaaS, green-tech) that came public flush with cash and are funding growth internally.
These firms already sit on cash piles—use sales & cash-flow metrics:
Added valuation filter Threshold Rationale
EV / Sales (Forward) ≤ 8× Strips out zero-debt “story stocks” trading at >10× next-year sales.
Price / Sales (TTM) ≤ 10× Extra check when forward consensus is thin.
Owner-Earnings Yield
(FCF + Maintenance CapEx Adj.) ÷ EV ≥ 1.5 % Penalises businesses where even abundant cash can’t buy a modest yield.
Custom: estimate maintenance cap-ex as 40 % of Deprec.&Amort. when unavailable.
________________________________________
________________________________________
