Perfect Piotroski Score Stocks Vol. 1

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The Piotroski F Score is a score from 0-9 that is a great indication of the fundamental health of a company. Many people will argue that fundamentals do not matter nearly as much as technicals, but the Piotroski F-Score has something to say about that. The score was developed by an accounting professor out of Chicago named Joseph Piotroski. He developed the simple, yet powerful score and realized that higher scoring stocks significantly outperformed the market as well as lower scoring stocks. The score is calculated by awarding one point for each of the following criteria the stock passes:

  1. Most recent Yearly Net Income > 0‚Äč

  2. Yearly Cash Flow from Operations > 0

  3. ROA has increased year over year

  4. Cash Flow from Operations > Net Income

  5. Long-term Debt to Assets has decrease year over year

  6. Current Ratio has increased year over year

  7. No new shares were issued in the last year

  8. Gross Margin has increased year over year

  9. Asset turnover has increased year over year

The most impressive aspect of the Piotroski F-Score is its performance statistics. We used the Equities Lab Stock Screener and Backtest to screen for stocks with perfect Piotroski scores of 9 as well as stocks with awful scores of 0. We then back tested the results to the compare performance using the S&P 500 as a benchmark. Below is a back test graph of stocks with a perfect Piotroski score of 9:

 

As you can see from early 2003 until today (February 6, 2014) investing in stocks with a Piotroski score of 9 and selling them when they no longer had a Piotroski score of 9 would have given you a 19.41% annual return while the S & P 500 would have given you a 6.06% annualized return.  Below is a year by year breakdown of the performance:

 

 

As you can see the strategy outperformed the market in all of the 12 years the backtest is covering.

 

 

Alternatively, the image above shows the back test returns of stocks with a Piotroski score of 0. They produce an awful annualized return of 5.39% compared to the 19.41% annualized return of the perfect Piotroski score stocks.

Now that you are confident in the Piotroski Score let me present to you a list of Stocks that currently (February 6, 2014) have a perfect Piotroski F-Score of 9 ranked by Market Cap:

Please read our Disclaimer before investing.

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