Jelly Roll Capital Equity Research

Market Analysis, Education, and Wall Street-Quality Stock Reports

Top Stocks of the Month: April

About once every month I rerun a data model that does a quantitative evaluation of about 1,600 stocks. The model gathers the names, prices, and latest financials, does some calculations, and then generates a power ranking from (for this update) stock #1 to stock #1683. While not perfect, this model is very useful for generating leads into some excellent and potentially under-priced businesses. The 25 stocks are:

1. FreightCar America (ticker: RAIL)

2. Aspreva Pharmaceuticals (ASPV)

3. Avatar Holdings (AVTR)

4. Interdigital Communications (IDCC)

5. NVR

6. Vaalco Energy (EGY)

7. Freeport McMoRan (FCX)

8. Nucor (NUE)

9. Global Industries (GLBL)

10. Loews Carolina Group (CG)

11. Patterson-UTI (PTEN)

12. AMREP (AXR)

13. Grey Wolf (GW)

14. Exxon Mobil (XOM)

15. ExpressJet (XJT)

16. Georgia Gulf (GGC)

17. US Physical Therapy (USPH)

18. Occidental (OXY)

19. Ceradyne (CRDN)

20. American Eagle (AEO)

21. Advance America (AEA)

22. K-Swiss (KSWS)

23. Southern Copper (PCU)

24. United Online (UNTD)

25. Frontier Oil (FTO)

Energy and basic materials companies again occupy a large portion of the list, although there have been a few changes from last month. Undervalued stock pick Alliance Resource (ARLP, Stock Report) has fallen out of the top 25 after rallying 9.8% since coverage was released, although Aspreva remains as one of the screener’s top stocks. One thing to note about this screen is that it judges each company on profitability merits as well as valuation; no bias is given to large or small companies, as indicated by the market capitalization range of $160 million for USPH to $430 billion for XOM. If the list was extended slightly, the 27th ranked stock is RELM Wireless (RWC), a $53 million micro-cap.

In addition to Aspreva (ASPV, Stock Report), some of my current favorites on this list are Freeport McMoRan and American Eagle Outfitters, both of which I believe are excellent companies poised for growth. Also, the appearance of real estate developers Avatar and NVR are intriguing given all the questions overhanging housing. Even in a tough market, those companies have continued to profit and are trading at attractive valuations relative to most other stocks.

The standing these companies have is obviously predicated on their ability to maintain earnings power. This screen, however, is set up to find companies that already deliver great profits, and don’t require any great growth to create shareholder value. If you believe commodity prices stabilize (not even rise, just hold current levels) or that the housing market won’t slide further, the appropriate companies on this screen should probably be in your portfolio.

One final note: Normally, I also look at the bottom of the list to find the worst stocks. Most of the companies at the very bottom are obscure companies with little in the way of profits, so they probably deserve their place. A few companies that did jump out at me were General Electric (GE), Sun Microsystems (SUNW), and Electronic Arts (ERTS), all of whom were in the bottom 5%.