One of the biggest bargains in the world of investing is membership in the American Association of Individual Investors. For $29 a year, members get a monthly magazine, the right to attend chapter meetings, and access to an excellent website with more than 60 stock screens.
A stock screen is simply a computerized list of stocks that meet specified criteria. What I love about AAII's website is that it tells how each screen has done over various periods, going back in most cases to 1998.
I like to focus on screens that have done well both in the long term and recently. One is the "Piotroski High F Score" screen. According to AAII, this screen has averaged a 21.3 percent annual return since 1998, and has returned 142.3 percent this year through Nov. 30.
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Joseph Piotroski is a professor of accounting at the University of Chicago Graduate School of Business. His screen (as interpreted by AAII) starts with a low stock price compared to book value (corporate net worth per share).
To pass the screen, a company must also pass eight out of nine additional tests, most of them relating to financial strength or operational success.
For example, a stock gets one point if it had a positive return on assets in the preceding fiscal year. If the return on assets is higher than the year before, that's good for another point. Another standard calls for cash flow higher than earnings. That means that earnings are not jacked up by non-cash accounting adjustments.
The Piotroski screen is not infallible. AAII's version of it experienced a 21 percent decline in 2007 and a 41.5 percent decline in 2008, plus small losses in 2000 and 2011. But it has produced gains about three quarters of the time.
Five stocks currently pass AAII's version of the Piotroski screen. They are:
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■ SkyWest Inc. — The Utah-based airline serves smaller cities for major airlines.
■ URS Corp. — Headquartered in San Francisco, URS is an engineering and construction company that does a fair amount of defense work.
■ Golden Star Resources Ltd. — A small gold mining company based in Toronto.
■ Fresh Del Monte Produce Inc. — Based in the Cayman Islands, it produces and sells fresh fruits and vegetables.
■ Delta Apparel Inc. — The company sells sports clothing under a variety of brand names .
John Dorfman is chairman of Thunderstorm Capital in Boston and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@ thunderstormcapital.com.