"Worrying is like a rocking chair. It gives you something to do, but it gets you nowhere."
-- Glenn Turner
It certainly seems that most of us have spent a significant chunk of our recent time worrying. We are consumed by the fear of another bank going under, and of "The Next Great Depression." As a result, we now ignore that, despite our 401(k)s having turned into "201(k)s," there are still companies out there hiring people and making money.
It should not come as a surprise to all Fools out there that, with the help of the CAPS screener, we can find some of these unique names -- even in the supposedly doomed financial sector.
Yes, it is true. Most of the companies coming from today's screen might not get as much air time as big-name giants like Goldman Sachs
That's why I want to focus on some of smaller names that we still consider worthy of Foolish attention. I chose to focus on just a few key criteria, which seem to be separating winners from losers in today's financial field:
- A CAPS rating of four or five stars
- A small market cap ($100M to $2B)
- Low debt/equity ratios of 0 to 0.5 times
- A price to book of more than 1 but less than 3 times
- A price to earnings ratio of between 5 and 30
Why these? Simple logic: First, in today's environment, high leverage equals trouble. Second, despite the commonly accepted wisdom, stock prices declining below book value can often be a warning sign that write-offs or losses lie ahead, which obviously does not spell good news for stockholders. Four- and five-star ratings -- which are predictive of outperformance -- are icing on the cake.
Here are some of the names that made the cut:
Company |
Market Capitalization |
Long Term Debt/Equity (mrq) |
Price/Book (ttm) |
Price/Earnings (ttm) |
---|---|---|---|---|
Diamond Hill Investment Group |
$125 million |
0.0 |
2.3 |
15.4 |
FPIC Insurance Group |
$331 million |
0.2 |
1.2 |
8.7 |
Knight Capital |
$1.3 billion |
0.2 |
1.3 |
9.1 |
Morningstar |
$1.3 billion |
0.0 |
2.5 |
14.9 |
optionsXpress |
$729 million |
0.0 |
2.7 |
7.5 |
Stifel Financial |
$869 million |
0.2 |
1.5 |
17.1 |
Thinkorswim Group |
$346 million |
0.4 |
1.6 |
5.2 |
Source: Motley Fool CAPS as of 11/21/2008. mrq = most recent quarter; ttm = trailing 12 months.
Of course, this screen is only a starting point in the research process; you can use the CAPS screener to narrow your choices even further.
You might not have heard some of these names before, but our All-Stars certainly have, so come and join us in Motley Fool CAPS to delve into these companies further. Let our 120,000-strong (and growing) CAPS community help you sift through the rubble in search of a few great stocks that might just make it despite all of the "doom and gloom" out there.
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