The market sell-off during the second part of last year has created some attractive value investing opportunities, in my view.
But the majority of these stocks don’t qualify for my Stock in Focus (SIF) screen, because they have lagged the wider market. As a result, they have a 1-year relative strength (RS 1y) below zero and fail one of my screening rules.
Only one stock qualifies for the SIF screen at the time of writing. But if suspend the RS 1y rule, then the screen returns 14 stocks. I’m not going to do this, for reasons I explained a couple of weeks ago.
Instead, I’m going to continue buying shares from the relaxed version of my SIF screen, which allows for a slightly more elevated valuation while still maintaining my positive momentum requirements.
As a side note, I wonder if the tide may soon turn for the market. The wider market is nearly back in positive territory on a one-year view, as measured by my FTSE All Share benchmark:
Perhaps the number of stocks qualifying for my SIF rules will soon start to improve. We’ll see.
Measuring…
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