Marty Fridson’s Stock Screen

In today’s Sunday Screener, we are following Distressed Investing editor Marty Fridson’s proprietary method for picking stocks that outperform the market.

An important tool in our analytical toolbox at Porter & Co. is our stock screens, in which we apply a list of criteria – relating to different financial, accounting, and performance parameters – to sift through the 3,000+ publicly traded stocks on U.S. markets. That’s how we’re able to identify the tiny fraction of the universe of U.S.-listed stocks that offer the best opportunities for making money.

In today's Sunday Selection, we report on a rent-collecting monopoly behind getting drugs to market – the market fears AI will disrupt it, but AI is about to become its biggest customer.

Most people know Marty Fridson as the distressed-bond expert. He’s regarded by Investor’s Digest as “the most well-known figure in the high-yield world.”

But Marty’s investment prowess doesn’t stop at bonds. He also is a fantastic stock picker, as evidenced by the performance of the companies whose shares Marty has recommended in Distressed Investing.

“Marty Fridson’s Stock Screen” is based on Marty’s extremely effective method for picking outperforming stocks.

In 2023, Marty published The Little Book Of Picking Top Stocks, in which he focuses on analyzing the best-performing stocks in the S&P 500 in prior years, and on the factors that led to their market-beating returns.

To see the criteria used to create “Marty Fridson’s Stock Screen,” go here.

As of the close of trading on Thursday, July 23, the following five stocks met these criteria:

Highs And Lows

Each week, we also monitor any stocks in the market making 52-week highs. We do this because any stock on its way to generating 2x, 3x, or 10x returns will spend a lot of time making new 52-week highs along the way. Thus, the 52-week-high list provides an opportunity to flag these potential high performers before they really break out, with a particular emphasis on lower-profile, less widely-followed stocks that might have otherwise gone unnoticed.

Notable stocks making a 52-week high this week:

JPMorgan Chase (JPM)
AbbVie (ABBV)
Bank of America (BAC)
Merck (MRK)
RTX (RTX)
Welltower (WELL)
Bristol-Myers Squibb (BMY)
Howmet Aerospace (HWM)
Bank of New York Mellon (BNY)
General Dynamics (GD)
U.S. Bancorp (USB)
CSX (CSX)
Phillips 66 (PSX)
Travelers (TRV)
Simon Property Group (SPG)
United Rentals (URI)
PACCAR (PCAR)
Allstate (ALL)
Aflac (AFL)
Dominion Energy (D)
Targa Resources (TRGP)
MetLife (MET)
Corteva (CTVA)
AMETEK (AME)
Entergy (ETR)

Presented By: The Golden Portfolio

We also monitor stocks on the 52-week-low list. In many cases, the names on this list are there for good reason – the market is often correctly pricing in weak fundamentals. However, once in a while, a great business with excellent long-term prospects finds itself on this list due to a temporary setback. This can create the rare opportunity to buy top-shelf merchandise at bargain-basement prices.

Notable stocks making a 52-week low last week:

Oracle (ORCL)
International Business Machines (IBM)
McDonald's (MCD)
PepsiCo (PEP)
Walt Disney (DIS)
Uber Technologies (UBER)
Intuitive Surgical (ISRG)
Lowe's (LOW)
Comcast (CMCSA)
Synopsys (SNPS)
Boston Scientific (BSX)
Honeywell Aerospace (HONA)
Nike (NKE)
AutoZone (AZO)
Alnylam Pharmaceuticals (ALNY)
Kroger (KR)
Otis Worldwide (OTIS)
Copart (CPRT)
Constellation Brands (STZ)
Lennar (LEN)
Charter Communications (CHTR)
Avery Dennison (AVY)
CoStar Group (CSGP)
Paramount Skydance (PSKY)

FOR PARTNERS ONLY

The Drug Industry's Tollbooth, Priced For Disruption

Today’s Sunday Selection is a beaten-down software company – a name that hit a 52-week low last month.

This is a company embedded in nearly every drugmaker on Earth. It owns the regulated data layer the industry runs on – the audit trails, clinical records, and submission files that regulators depend on for as long as a drug exists. Its gross margins run north of 75% with 50% free cash flow margins. It has a deep net cash position and was recently added to the S&P 500.

Five years ago, this company was generating $1 billion in annual revenue and the stock traded around $250. In the last three years, revenue has tripled and free cash flow has doubled. Yet today, the stock is trading for 20% less.

The market has marked it down on fears that artificial intelligence (“AI”) will disrupt software. But for this company, AI is the force pushing more work through its systems – and management just revealed a plan to monetize AI labor itself. A near-monopoly at its cheapest valuation as a public company, this stock is a compelling setup for today’s Sunday Selection.

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