What are we looking for?
Stocks with year-to-date price momentum greater than the S&P 500 and the Dow Jones industrial average.
The screen
Every year there are a few dates when many consumers are virtually guaranteed to spend a few more dollars on sweets and alcohol – celebrations such as Christmas, birthdays, Halloween, and, of course, Valentine's Day.
This month, many people will have spent extra cash on flowers, chocolate and wine, maybe a night out at a nice restaurant, jewellery or even lingerie. This is exactly what we screened for: equities with headquarters in North America, with a business description from our Thomson Reuters Eikon database that contained any one of the following key words: flowers, chocolate, wine, lingerie, restaurant or jewellery. We filtered out any stocks with a price of less than $1 because we are looking for well-established companies.
We then screened out companies that had a lower price momentum, year-to-date, than the S&P and the Dow Jones industrial average. (The S&P 500 and Dow have gained 3.99 per cent and 3.29 per cent year to date, respectively.)
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What did we find?
The screen left us with eight companies that have year-to-date price momentum above 4 per cent. An additional hunt for value led us to four companies within this list with current P/E ratios lower than their five-year historical averages. These companies are:
Owens-Illinois Inc., with a current P/E of 15.08, lower than its five-year historical average of 18.42. The company manufactures glass containers for the food and beverage industry. The stock has gained 14.9 per cent year to date.
Brown-Forman Corp., with a P/E of 17.77, lower than its historical average of 24.33. The company manufactures, bottles, markets and sells a range of alcoholic beverages and has gained 4.3 per cent year-to-date.
Rocky Mountain Chocolate Factory Inc., with a P/E of 12.79, lower than its historical average of 20.56. The international franchisor, confectioner and retailer has gained 7.8 per cent in 2017.
Darden Restaurants Inc., with a P/E of 22.09, lower than its historical average of 27.72. The full-service restaurant, which owns and operates more than 1,500 restaurants in the United States, has gained 4.6 per cent this year.
Investors should conduct additional research before investing in any of the stocks shown here.
Paul Hoyda, CFA, is a market specialist in the financial and risk division of Thomson Reuters and specializes in governance, risk and compliance.