The StockCentral Stock Screener has a section called Valuation that may help you with culling stocks that are probably overvalued. However, your definition and judgment as to what constitutes "overpriced" may vary, but these factors should get you started.

Besides the PE Ratio, in this section you can screen by Historical Value Ratio (HVR). HVR is similar to Relative Value on the SSG or Toolkit 6 Stock Study. Historical Value Ratio is the current Price/Earnings Ratio divided by the Signature Price/Earnings Ratio; the Signature P/E Ratio is the median of a company's annual High and Low Price/Earnings Ratios and is meant to represent the "normal" P/E Ratio that a stock usually sells for.

Setting the Historical Value Ratio to a maximum of 1.0 or 1.10 would mean that only stocks with P/E Ratios below 100% or 110% of their Signature P/E Ratios would appear on your list. For stocks that are currently slowing in growth or are expected to grow more slowly in the future, you would also expect P/E Ratios to also decline, perhaps even below their Signature P/E Ratios, so this could turn up stocks that are still "overvalued" when compared to future growth. I would suggest limiting the HVR to a minimum of 0.65 to 0.75, since stocks that sell at 65% or 75% of their Signature P/E Ratios are probably experiencing fundamental shifts in their growth or problems that have driven down their prices to levels that are no longer "undervalued."

I usually set HVR to somewhere between 0.75 and 1.1 when looking for "reasonably" valued stocks.

Relative Price is also available in the Valuation section of the screener. Relative Price is calculated thus: Relative Price = (PresentPrice - 52WeekLow) / (52WeekHigh - 52WeekLow). For example, setting this criteria's parameters to a range of .2 min and .5 max will return companies with a current price that is between 20 and 50 percent of the 52-week high price. You could use this if you wanted to find stocks that are well off their 52-week high prices.

Doug

 

What does the price tell you by itself? I'm not sure of the value of showing the current price, but if there was a good reason for it we could consider it.

You can also click the Report link to see the current price. You could right click that link and open it in a new browser so you remain on the screen results while you explore.

Doug

I believe that a resolution will be reached at the absolute last moment that will leave both sides with plenty to complain about the other. In other words, it's business as usual in Washington!

I see a lot of year-end selling by investors who might have lots of unrealized capital gains, and I see companies making special dividends to distribute cash to shareholders while the lower tax rate is in effect. But there's nothing that shakes my confidence in the longer-term success potential of the high-quality stocks in my portfolio.

Doug

Doug,

This is my pitch for the value of Prospector. I've had Prospector for 10+ years and it is my second most recommended tool after the Toolkit. It is a good tool for planning & spec'ing out an investor's criteria and values for their investment wish list. The Prospector's criteria can be focused on BI criteria so that when Toolkit SSGs are prepared there are less false starts - a good time saver & less disappointing SSGs.

Doug, when I saw this post, it reminded me of Barb & Corry Dalmaso's Prospector tips which were emailed once a month. I always looked forward to their next prospecting gem which I then added to my personal collection. I believe their examples helped the Prospector user get past the abstractness of getting started. Once I got past this fear, the Prospector became my best friend for searching for my selection of companies. So my recommendation - bring back the monthly Prospector tips.