I decided last week to follow Jim Slater’s example and relax my valuation criteria slightly. This left me with a choice of five stocks to consider adding to the SIF Portfolio this week.
If you missed last week’s article, I’m experimenting with reducing the minimum earnings yield of my SIF screen from 8% to 6% and increasing the maximum rolling PEG ratio to 1.3. No new stocks have qualified for my screen for four weeks, and the portfolio’s cash balance is becoming excessive.
You can see the results of the relaxed screen here.
Too much overlap
One of the companies which qualifies for the relaxed version of the screen is steelworks group Severfield. Last week’s comments suggested that this is a popular pick with Stockopedia users. The shares have nearly doubled since July and boast a StockRank of 95. The outlook is still improving, but the SIF portfolio already has five industrial stocks.
Of these, John Laing operates in the same Construction amp; Engineering industry sector as Severfield, while Flowtech Fluidpower is also exposed to the construction market cycle. I’ve had to rule out Severfield to avoid excessive duplication. Engineering services group
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