Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
Advansix (ASIX), a recent spinoff from Honeywell, is a fully-integrated manufacturer of Nylon 6 resin, which is a polymer resin used to produce engineered plastics, fibers, filaments and films used in end products such as electronic components, carpets, sports apparel, fishing nets, food and industrial packaging.
The stock scores highly based on the model outlined by Ken Fisher in his book Super Stocks. Fisher's model looks for stocks with low P/S ratios, low debt, positive free cash flow and good profit margins. ASIX has a P/S of 0.4 and the firm carries no debt, both big positives. The company's three-year net profit margin has averaged 5.4 per cent, which is another positive.
In addition to the Fisher model, the stock also scores highly based on the book-to-market approach, based on Joseph Piotroski's methodology. The Piotroski screen looks for stocks in the top 20 per cent of all stocks based on the book-to-market ratio (the inverse of price-to-book). If a stock meets that criteria, it is then filtered through eight other filters based on improvements in accounting measures such as a positive change in return on assets, changes in net income and changes in the current ratio. AdvanSix currently gets an 80 per cent scored, based on the Piotroski-inspired analysis.
With a market cap of around $460-million, this is a small-cap name that will most likely exhibit more volatility than the broader market.
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