Week 7, 2018 – Top Stock Bargains Watch List

Author: AsgeirTHE NO 1 TOP BARGAIN COMPANY FROM LAST WEEK, UNISYS CORP. (NYSE: UIS) JUMPED 18,6 % ON FRIDAY AFTER RELEASING ITS FULL-YEAR RESULTS! Including Wednesday Feb 14th the stock has risen 33 % (!) since Thursday last week. Just a coincidence it was rated #1 on top..? You can find last week’s list here: Top Bargains Watch List, Week 6.

Please enjoy this week’s newsletter. I hope that you will continue to have great benefit of the Top Bargains Watch List 🙂

Anyway, please leave a question in the comments field area at the bottom if anything is unclear, or if you just simply want to discuss a related issue.

The average Market Adjusted Total Score (MATS) this week: 87,6

As always, I run the Magic Formula Investing screener to pick the 50 top companies with a minimum market cap of 300 Mill. USD. I intentionally exclude companies above 8.000 Mill. USD (the watch list is limited to small/medium cap companies). This week (as of Feb 13th) the screener provided a portfolio of 32 companies. These companies from the screener all together gave an average MATS score of 87,6. Like last time, one company is not included in the average score, which is Unisys since this stock also this week got a very high score of 557,8, and this would have given an unbalanced average score, and several of the other top bargain stocks would have been excluded. The companies that ended up with higher than average score, are the top bargain companies listed in the table below.

Some interesting things to notice from this week’s list:

  • Three companies get a score higher than 200 points. And this is why:
    • Tivity Health Inc. (TVTY) has a Return on Invested Capital (ROIC*) of 197 %, which added with Earnings Yield of 11 % results in a “Financial Score” of 208. Adjusted for the market discount it ends up with a MATS score of 215,3. * ROIC is calculated EBITDA / Net Fixed Assets.
    • GameStop Corp. (GME) has a Net Working Capital (NWC) that exceeds its Market Cap Value with 77 %, which gives it a “Financial Score” of 162 when Earnings Yield and ROIC also are added. The stock price has a 66 % discount from its highest level in three years, and adjusted for this GME gets a MATS score of 207,9.
    • Unisys Corp. (UIS) still gets an extremely high score of 557,8, and this is because of its Net Working Capital exceeding the stock’s market cap value in a huge manner (by 474 %). But because the stock price has jumped nearly 30 % since last week’s calculation, the score is down almost 200 points from 742.
  • Six of the stocks have a market discount of 50 % or more compared to their highest stock price during the last three years. And these are:
    • SYNT, AMAG, CJREF, PDLI, GME and UIS with Amag Pharmaceuticals (AMAG) with as much as 82 % price discount. AMAG is added almost 70 points as a result of this in its MATS Score (Financial Score: 50,7 and MATS Score: 119,9).
  • Seven stocks get into the list because their Net Working Capital makes up 50 % or more of the Market Cap Value: 
    • UIS, GME, PDLI, CJREF, AMAG, AGX and AMCX. Not surprisingly do several of these stocks also qualify as +50 % discount companies in the point above, since a low Market Cap Value is essencial in both.

Here is the list – with calculations and scores:

All companies listed here are the stocks that got an above average MATS (Market Adjusted Total Score). You can read more about how the numbers and scores are calculated and how the model works here: “The Market Adjusted Total Score – MATS”.

(You will find a further explanation of the parameters just below the table.)

Company High last 3 Yrs Current Price Dividend paid* Percent of High Added Value (if >50 % discount from High last 3 Years)* Financial Score* Total Score S&P, Percent of High Market Discount*

Market Adjusted Total Score*

UIS 23,77 10,8 45,4 4,6 529,6 536,4 92,7 42,7

557,8

2018-02-13
TVTY 48,05 37,75 78,6 208,2 208,2 92,7 14,1

215,3

2018-02-13
GME 47,44 15,58 0,38 33,6 16,4 162 186,5 92,7 42,7

207,9

2018-02-13
PDLI 7,29 2,43 33,3 16,7 127,4 152,4 92,7 42,7

173,8

2018-02-13
EVC 9,26 6,55 0,05 71,3 133,5 133,5 92,7 21,4

144,2

2018-02-13
CJREF 17,44 6,7 0,08 38,9 11,1 82,6 99,3 92,7 42,7

120,6

2018-02-13
AMAG 75,8 13,7 18,1 31,9 50,7 98,6 92,7 42,7

119,9

2018-02-13
AGX 74,5 39,5 53,0 88,7 88,7 92,7 39,7

108,5

2018-02-13
AMCX 85,78 51,59 60,1 87,8 87,8 92,7 32,6

104,1

2018-02-13
HRB 37,26 25,91 0,24 70,2 86,9 86,9 92,7 22,5

98,2

2018-02-13
CNCE 29,05 20,26 69,7 85,4 85,4 92,7 23,0

96,9

2018-02-13
SYNT 52,59 21,66 41,2 8,8 61,7 74,9 92,7 42,7

96,3

2018-02-13
EGOV 25,35 13,5 0,08 53,6 71,9 71,9 92,7 39,1

91,5

2018-02-13
S&P 500 2873 2663 92,7 92,7 7,3 2018-02-13
*MATS: Market Adjusted Total Score. A score which aims to discover stocks with the best combination of financial performance and historical prices.
*Added Value: If >50 % discount from the highest price last 3 years, a factor of 1,5 is added to this difference into the “Total Score” area.
*Market Discount: If the stock has fallen (or risen) more than the market, a factor of 0,5 is used into the “Market Adjusted Total Score” area to adjust for the difference.
*Dividend paid: Dividend paid after the last quarter’s results.
*Financial Score: A company’s Earnings Yield (EY) + Return On Invested Capital (ROIC). If Net Working Capital makes up 50 % or more of the Market Cap Value, the score is adjusted for this: (EY+ROIC)+(NWC%/MCV%)+50. The last available numbers from the last quarter are used (data from Yahooo Finance).
Disclaimer: The Market Adjusted Total Score (MATS) calculated above, is only a result of my own calculations, and must not be interpreted as “market signals” in any way. I am not an investment advisor. Even though I do my best to avoid mistakes, wrong calculations may occur.

What changes are there in the Top Bargains Watch List since last time?

No changes regarding the companies that are included. In other words, no stocks are in or out of the list this week.

How can you compare your own stocks to the MATS Score of the top bargain stocks?

This week I provide you with an example of how to calculate the Market Adjusted Total Score. With this tool, you can type in the numbers from your own stocks into the formula, and watch how the values influence the MATS Score. In just a few seconds, you can see which values you need to put in to make your stock as strong as the top bargain companies. You can change several of the values, e.g. its market price or the financial score. Try it and see for yourself (in Dropbox, you need to click “Open” at the right to make it work in e.g. Excel Online):

Calculate the Market Adjusted Total Score

I typed in the values of Amazon Inc. (AMZN) just to check what score it has, and it gets a MATS score of only 15. The stock has a “Financial Score” of 18. To make AMZN get a score around the average top score of this week’s list (87,9), its stock price needs to be as low as $ 270! Or, with yesterday’s closing price of $ 1451, it needs a “Financial Score” of 90 to get a MATS Score of 87…

Is it possible to get a MATS calculation for other stocks too?

Yes, it certainly is! For any company in the US Stock Markets (or any other leading Stock Exchange in the world) it is possible to make a calculation of the Market Adjusted Total Score. As long as the company’s financial results are made available, I will be able to make this for you. If you read this, and you have not received a MATS calculation of your favourite stocks before, you can have one calculation FOR FREE! Just make a comment below of which company/stock you need to get a MATS score of, and you will receive this within a day or two. Or send a request to my e-mail at support@stockbargains.net.

The price of further MATS calculations (Market Adjusted Total Score):

  •  10 USD per calculation
  • 25 USD for three stocks (or the last available quarter plus the two last years for one stock).
  • 49 USD for one stock compared to five competing stocks (picked by you). MATS Scores are calculated for all six stocks. For even more relevant comparison, MATS Score of the stock is also adjusted to the average market discount of the five other stocks (in replacement of the adjustment vs the S&P 500 Index).