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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Mechanical Investing
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Author: rayvt ✧☼🐝  😊 😞
Number: of 6132 
Subject: Re: question for Jim
Date: 02/26/25 11:40 AM
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No. of Recommendations: 10
I think it's this one:

boards.fool.com - Universe of large cap stocks suggested

1) Universe of Large Cap stocks. Suggested: ValueLine stocks with timeliness rating (about 1400).
Used here: Russell 1000 (large caps) + S&P 400 (mid caps)
2) (optional) Only those stocks that have a dividend.
3) (Recommended) The 50% of the stocks closest to their 52-week high.
4) Rank by ROE, take the top 33% of them
5) Compute NetCash as "Cash & short-term investments" minus "long term debt". This is enterprise total, not per share.
6) Rank by NetCash. Take the 40 with the highest NetCash.
7) Re-evaluate every 1-2 months. Sell any stock that is not in the top 45. (40 HTD 45)

The stated rationale for step 5 is that a large stock with a lot of ready cash is unlikely to blow up.

Note that when discarding stocks that do not pay a dividend (step 2) there are fewer than 40 stocks

Two quick comments:
* That last statement sounds wrong?
Are you requiring the [cash - debt] value to be positive in addition to merely sorting on it?
Based on my testing from the VL universe, if I start with top 1157 by market cap to match your universe size and keep
the optional "50% closest to 52 week high" step there I see on average 115 stocks eligible for the final step.
That's a lot more than 40, so you might have a glitch.
It should be 1/3 of 1/2 of the number of dividend payers.

* the step 3 is a recently invented tweak of mine, not part of the original screen. Not sure if it was mentioned before.
For those following the evolution of the screen it might seem anomalous.

Jim

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