12 Large Cap Stocks with High Piotroski F-Score

Introduction

Welcome to the large cap Piotroski F-Score screen for November. Piotroski f-score looks for stocks of the companies with solid fundamentals that are improving. Joseph Piotroski, then of University of Chicago GSB, laid out these fundamental filters that in his research adds about 7.5% additional alpha to a standard P/B ratio screen. The Piotroski F-Score is a filter for the quality of the operations and its trajectory of improvement. It is not a statement on the valuation.

Screen Details

This screen looks for large cap stocks over $5 Billion in market capitalization with solid fundamentals that are getting better, as measured by Piotroski F-Score:

Piotroski F-Score > 8

This filter does not screen for low price/book ratio or any other metric. The resulting list of stocks need to be evaluated for these additional value filters.

The screen was run with the Stock Rover screener, and we found 12 stocks listed on the American exchanges that fit this criteria. You can download the filter criteria here so you can import it in your Stock Rover account and run it yourself as you need. Don't have a Stock Rover account? Sign up here for a 2 week free trial

The Screen Results

Stock	Company	Piotroski F-Score	P/B Ratio	P/E Ratio
ALLE	Allegion	9	15.6	24.1
ALXN	Alexion Pharmaceuticals	9	2.3	16.6
BDX	Becton	9	3.1	62.9
DOX	Amdocs	9	2.6	23.0
DVN	Devon Energy	9	1.3	9.3
KEYS	Keysight Technologies	9	6.6	63.5
KL	Kirkland Lake Gold	9	6.6	26.0
LMT	Lockheed Martin	9	27.5	18.0
NUE	Nucor	9	1.6	9.5
PAYC	Paycom Software	9	26.2	75.0
QCOM	Qualcomm	9	20.0	31.5
V	Visa	9	13.5	34.3

Notes and Observations

Since valuations are not part of the Piotroski F-Score evaluation, they need to be applied before we can make any judgement on these stocks. We are able to use all other valuation tools at our disposal. As can be seen from the list, most large cap stocks with solid 9 Piotroski F-Score sell at premium multiples.

That being said, I did a quick Price/Graham Number calculation on these stocks, and find the following:

DVN: P/GN = 0.4. Declining sales growth amidst a soft oil and gas market shows up in the stock price of Devon Energy in the recent years. It appears to be a high quality company in a cyclical sector. Worth watching for the future.
NUE: P/GN = 0.9. Another cyclical stock suffering through the slowdown in many large steel consuming economies, as well as the trade war with China. Some of the risk factors in the stock/industry may be temporary. Adding to the list for further review.

Other stocks have unreasonably high P/GN and were not further considered.

Ending Note

I like Piotroski f-score as an additional layer of quality on the value stocks that you are evaluating. The f-score by itself is not a complete screen. Other valuation filters need to be applied along side the Piotroski f-score filters. As you can see, not many stocks succeed on the F-score =9 check, but from those who do, much fewer stocks are actually good values.