18 Fundamentally Strong Stocks With Positive Technicals

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Each month I update a fundamental/technical screen at Scott's Investments and track the results real-time. June's list of 14 stocks is here and the top 10 rated stocks returned an average of 6.20% versus 5.08% for SPY. The entire list of 14 stocks last month returned an average of 5.87%.

The screen looks for the following:

earnings growers still reasonably priced as judged by the PEG ratio
low debt
a history of high return on equity and investment, and
price momentum as gauged by the percentage the stock is trading to its 250 day high.
The stocks are then ranked based on fundamental factors as compiled by stockscreen123.

18 stocks qualified for this month's list. This tells us that limited individual stock momentum exists in the market and the fundamental factors on the list can still be found among the high momentum stocks. However, the number of qualifying stocks is substantially less than April's 34 stocks, which is not surprising given that overall equity momentum has waned in May and June, even after rebounding in early July.

Last month I profiled two stocks, EZCORP (EZPW) which performed very well until a slight earnings miss slammed the stock last week. I also featured Applied Industrial Technologies (AIT), which remains the number one stock on this month's list, two spots ahead of Apple (AAPL). After purchasing some EZPW after their earnings miss, I was stopped out today for a small loss. Until the market is able to find a bottom in the stock, I'll be waiting on the sidelines. Long-term, I think the stock still has strong fundamentals and potential for more appreciation.

I have no current position in AIT and the stock has an earnings conference call scheduled for August 9th. It was down over 3% today and is now below its 50 day moving average, while still above its 200 day moving average. The short to intermediate picture for AIT looks weak, especially if it is unable to hold the $33 support level, at which point the stock would begin making lower lows, a bearish sign. A strong earnings report could bolster the stock, as well as some clarity in the overall equity markets (assuming a debt ceiling resolution is reached before August 9th). The stock yields 2.24% and has a price-to-earnings growth ratio (PEG) below 1, at .86. It also has no long-term debt and trades at a price to sales ratio of .67. It is a stock I am watching but will most likely stay on the sidelines until at least after August 9th.

Bed Bath and Beyond (BBBY) is another stock to watch on this month's list. It reported earnings on June 22nd and has rallied fairly well since that date. It was on last month's list and was up 5.55%. It currently is in a trading range, so technically driven investors should watch support at $58 and resistance at the 52 week high around $60.50 as signals as to the stock's next big move. The stock is not overly cheap, but still trades at a modest forward P/E of 14, has no long-term debt, and has shown strong earnings growth in recent quarters.

(Chart courtesy of Finviz)

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Ticker	Name	7/27/11 Update	Rank
AIT	Applied Industrial Technologi	Here	99.02
NSR	Neustar, Inc	Here	95.93
AAPL	Apple Inc.	Here	95.87
NSP	Insperity Inc	Here	94.78
TRLG	True Religion Apparel, Inc.	Here	94.46
NTES	NetEase.com, Inc. (ADR)	Here	93.86
BBBY	Bed Bath & Beyond Inc.	Here	93.63
VSEA	Varian Semiconductor	Here	92.99
MDF	Metropolitan Health Networks,	Here	91.93
WTSLA	The Wet Seal, Inc.	Here	89.99
DTV	DIRECTV	Here	86.41
CTCH	Commtouch Software Ltd.	Here	84.09
GOOG	Google Inc.	Here	82.59
TNDM	Neutral Tandem Inc.	Here	81.66
INTC	Intel Corporation	Here	77.44
PDLI	PDL BioPharma Inc.	Here	75.82
DECK	Deckers Outdoor Corporation	Here	72.67
TSM	Taiwan Semiconductor Mfg. Co.	Here	70.28

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