Pure value screens often surface 'value traps'—cheap stocks that stay cheap for years. By layering fundamental quality metrics with basic technical trend confirmation, you can focus on profitable companies rotating back into favor.
Recommended Screener & Framework Parameters
| Filter / Metric | Target Setting | Purpose |
|---|---|---|
| P/E Ratio | Under 20 (or Profitable) | Filters out speculative companies trading at extreme earnings multiples. |
| PEG Ratio | Under 1.5 | Balances valuation against expected earnings growth rate. |
| Return on Equity (ROE) | Over +15% | Highlights management teams generating high returns on shareholder capital. |
| EPS Growth Next 5 Years | Positive (> 5%) | Ensures the underlying business is expanding rather than shrinking. |
| 50-Day Moving Average | Price above SMA50 | Confirms buyers are stepping in so capital isn't dead money. |
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Key Execution Rules
- Compare a stock's P/E and ROE against its own sector peers rather than applying a rigid universal number across tech, utilities, and banks.
- Check free cash flow consistency over the past 3–5 years to verify that accounting earnings translate into actual cash.
- Use technical support zones to time entries gradually instead of chasing green breakouts.
Educational Note: Parameter settings above are starting templates demonstrated on @SereneTradingStrategy. Always paper-test and adapt risk parameters to your own account size and tolerance.