These are projects posted by the students of Dr. Gove Allen at Brigham Young University. These students have taken one semester-long course on VBA and generally have had no prior programming experience

Tuesday, April 15, 2014

Graham's 10 Hurdles Stock Screener

Executive Summary:

            In the asset management industry, portfolio managers who actively manage stock portfolios spend much of their time performing cursory evaluations of many different companies to find stocks which may be good candidates for deeper analysis. There are many different methods that portfolio managers will use to perform this first-pass evaluation of different companies. One such method is the “Graham Screener”.
Benjamin Graham is widely regarded as one of the most successful and influential value investors of all time. His book, Security Analysis, describes the guiding principles of Value Investing, many of which are still followed to this day. As part of his work, Graham came up with a list of ten “points” or “hurdles” which a stock should pass in order to be considered a good value. The Ten Hurdles are defined as follows:

1.      An earnings-to-price yield of twice the triple-A bond.
2.      A P/E ratio down to four-tenths of the highest average P/E ratio the stock attained in the most recent five years.
3.      A dividend yield of two-thirds the triple-A bond yield.
4.      A stock price down to two-thirds of tangible book value per share.
5.      A stock price down to two-thirds of "net current asset value" (defined as current assets less total debt).
6.      Total debt less than tangible book value.
7.      Current ratio of two or more.
8.      Total debt equal or less than twice the net quick liquidation value.
9.      Earnings growth over the most recent ten years of 7% compounded.
10.  No more than two declines of 5% or greater in year-end earnings (relative to the previous year) in the most recent ten years

These criteria are very data intensive and it would take quite a long time for a fund manager to manually look up the numbers and perform the comparisons on them one by one. In addition, these ten criteria are very rigorous and it is difficult for the vast majority of stocks to pass all ten. This project is an attempt to automate the process of applying the Graham Screener to a number of stocks based on a list of ticker symbols provided by the user.

1 comment:

  1. eToro is the most recommended forex trading platform for beginning and full-time traders.


Blog Archive