How to Find 10-Bagger Stocks with a Stock Screener (Easy Tutorial)

About this video

• Video Title: How to Find 10-Bagger Stocks with a Stock Screener (Easy Tutorial)
• Channel: Dividend Compounders with Cheese
• Speakers: Aamos
• Duration: 00:39:34

Overview

This video serves as a tutorial on how to utilize stock screeners to identify high-quality dividend compounders and potential 10-bagger stocks. The presenter, Aamos, explains how to use screeners on both macro and micro levels, emphasizing a contrarian strategy of investing in undervalued, high-quality companies.

Key takeaways

• Macro-Level Analysis: Start by using TradingView's S&P 500 heatmap to get a visual overview of sector performance. This helps identify which sectors are thriving and which are struggling year-to-date or over shorter periods.
• Contrarian Strategy: The presenter advocates for investing in "beaten-up" industries or stocks that are currently undervalued, believing they have a higher probability of rebounding.
• Stock Screener Filters: Key indicators for screening include:
  • One-year price change (looking for negative values for the contrarian approach).
  • Forward trading multiple (PE ratio) to assess current valuation.
  • 10-year average PE ratio to compare against historical valuation.
  • Revenue growth (at least 0% for overall market screening, at least 10% for 10-baggers).
  • Dividend growth rate (at least 3% for the past 5 years).
  • Dividend yield (at least 1%).
  • RSI (Relative Strength Index) to identify potentially oversold stocks (around 30 or below).
• Financial Health Indicators: When evaluating a stock, examine:
  • Revenue growth year-over-year.
  • Earnings per share (EPS) growth.
  • Shares outstanding (ideally decreasing to increase EPS).
  • Free cash flow per share.
  • Dividend payout ratio (and free cash flow payout ratio) – a lower ratio is generally healthier.
  • Dividend growth history and sustainability.
• 10-Bagger Screening: For identifying potential 10-baggers, focus on smaller companies (market cap under $3 billion) with strong revenue growth (at least 10% over 3 years), positive free cash flow, and EPS growth (at least 10%). Avoid excessively high trading multiples.
• Platform Recommendation: While mentioning Finviz, the presenter prefers stockanalysis.com for its visual appeal and usability for stock screening.