Screening For Compounders On Porter’s 3x Screen

An important part in our analytical toolbox is our stock screens, where 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 identify the tiny fraction of U.S.-listed stocks that offer the best opportunities for creating huge returns.

In today’s Sunday Selection, we report on a company managing the power production for the massive AI build-out taking place – it’s little known but widely used.

But first, we revisit a popular stock-filtering tool we call Porter’s 3x Stock Screen. Over the last 25 years, buying an equally-weighted basket of stocks generated from the 3x screen has tripled the return over the overall stock market (the S&P 500). Below we also show the names of significant stocks hitting 52-week highs and 52-week lows – a helpful list that we use to guide our analysis.

Porter’s 3x Stock Screen

The 3x Screen was inspired by Porter himself, who challenged the Complete Investor analyst team to create a filtering tool to find companies with high capital efficiency, steady revenue growth, and that trade at reasonable valuations… and to backtest the results to ensure the screening criteria selected stocks that generated market-beating gains over time.

To see the criteria used to create Porter’s 3x Stock Screen, go here.

As of Thursday’s close, this screen produced the 28 stocks shown in the table below. We have displayed each of the criteria noted above along with each company and ticker symbol, as well as each stock’s beta (a measure of volatility versus the overall market). Note that beta is not used in the screening criteria, but rather to provide a reference point for noting the volatility of the stocks on the list.

Next, the highs and lows.

Highs And Lows

Each week, we also monitor any stocks in the market making new 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 new 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 new 52-week high this week:

• Amazon (AMZN)

• Broadcom (AVGO)

• Walmart (WMT)

• Advanced Micro Devices (AMD)

• Caterpillar (CAT)

• Cisco Systems (CSCO)

• Applied Materials (AMAT)

• GE Vernova (GEV)

• Texas Instruments (TXN)

• KLA (KLAC)

• Linde (LIN)

• NextEra Energy (NEE)

• Analog Devices (ADI)

• Eaton (ETN)

• Union Pacific (UNP)

• Marvell Technology (MRVL)

• Prologis (PLD)

• Vertiv (VRT)

• Vicor (VICR)

• Equinix (EQIX)

• Trane Technologies (TT)

• Quanta Services (PWR)

• FedEx (FDX)

• Bank of New York Mellon (BK)

• Cummins (CMI)

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We also monitor stocks on the new 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 new 52-week low last week:

• Abbott Laboratories (ABT)

• PDD Holdings (PDD)

• Danaher (DHR)

• Accenture (ACN)

• Zoetis (ZTS)

• Prudential Financial (PRU)

• ResMed (RMD)

• Cognizant Technology Solutions (CTSH)

• Tractor Supply (TSCO)

• Broadridge Financial Solutions (BR)

• International Paper (IP)

• lululemon athletica (LULU)

• Check Point Software Technologies (CHKP)

• Insulet (PODD)

• Best Buy (BBY)

• Clorox (CLX)

• Texas Roadhouse (TXRH)

• Amdocs (DOX)

• ConAgra Brands (CAG)

• Repligen (RGEN)

• EPAM Systems (EPAM)

• Pegasystems (PEGA)

• Ollie's Bargain Outlet (OLLI)

PARTNERS ONLY

The Toll Booth On The AI Power Grid

Today's Sunday Selection comes off the 52-week high list – a power technology company that has quietly become one of the most important suppliers in the massive AI infrastructure build-out. Most investors have never heard of it. But every major AI chip being designed today faces the same physical constraint – getting enough electricity into the processor without melting the board – and this company holds the patents on a leading solution. It just reported Q1 results: record revenue, a 70% backlog surge, and a business model that is quietly becoming the Qualcomm of AI power delivery.

(To become a Partner Pass member, contact our Customer Care team at 888-610-8895, internationally at +1 443-815-4447, or via email at support@porterandcompanyresearch.com.)