Slight Changes to NCAV Screens

by The Graham Investor on February 6, 2010

Since quite a few people requested it, and there were many questions such as “Why isn’t XXX showing up on the NCAV screen?” I have decided to remove the criterion of positive Operating Cash Flow. This will probably lead to more stocks showing up on the screen. OCF will still be displayed and you can sort by that column. Part of the reason for removing OCF is because it was sometimes left out altogether in the data; so a stock which otherwise should have been on the screen by virtue of NCAV may have been left out as a result even though its OCF might actually have been positive.

The only criterion in effect is now a cut off where a stock’s price is at 130% of its NCAV value. This is probably the point where we might begin to feel there is no value in investigating a particular stock further, but it also gives us room to watch any stocks that slowly make their way onto the screens and start drifting down to their NCAV value or below. I hope this change helps make the screen more useful. Currently, we are still using the data that has served us well to date. The plan is to start using another data source and incorporate NCAV screens of foreign stocks also; this should happen in a few months time when a few kinks are worked out.

In the meantime, I should probably take the opportunity to remind users of the NCAV screens to do their due diligence – beware of potential bankruptcies, or stocks that are going through bankruptcy already. Also be mindful of the wide spreads in these low-priced stocks. “Low price” does not necessarily mean “cheap”. The best way to take advantage of this type of screen is to buy many different stocks (Graham himself suggested 30-40 such issues) and spread your risk as much as possible. Good luck!

{ 18 comments… read them below or add one }

Leave a Comment

Previous post:

Next post: