Stock ideas in a new world

Looking for opportunities amid trade disputes and other developments?

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Although US stocks are reapproaching all-time highs set back in January, the investing landscape looks very different today. Since January, there have been 2 central bank interest rate hikes. Global trade disputes have ratcheted up. More recently, Turkey appears to be experiencing economic troubles.

But some things remain the same. The backdrop of persistently strong corporate earnings has helped drive US markets back toward record levels, despite concerns about relatively high valuations and other risk factors.

If you are looking to adjust your holdings, or are searching for new ideas, one tool that you might use to sort through the stock world to find those that could meet your objectives is a stock screener.

Here, we feature 5 stock screens from Fidelity.com, plus the top 10 results for each.

Looking abroad, looking inward

Trade wars have dominated much of the investing headlines in recent weeks and months, and for good reason. According to S&P Dow Jones Indices, foreign sales of S&P 500 companies amounted to 44% in 2017, up from 43% the year before (but down from a near-term high of 47% in 2014). Given that such a significant percentage of sales by US companies occurs abroad, trade tensions have the possibility to be a significant risk factor for all investors—and especially for those companies and industries that might be subject to tariffs.

As the table below illustrates, US technology firms have the most foreign revenue exposure, followed by energy and materials companies. Financials, consumer staples, and consumer discretionary companies have the least foreign sales exposure.

If you want to use the stock screener to explore stocks in those sectors with the least foreign sales exposure, under Basic Company Facts you might select Sector/Industry/Sub-Industry, and choose the financials, consumer staples, and consumer discretionary. To narrow your search to established companies, you might select Market Capitalization and choose Mega Cap and Large Cap. You might also want to scan for those companies that have exhibited positive fundamental characteristics, such as Very High Cash Flow Growth Rate under Company Growth.

As of August 23, here are the top 10 results of this screen, sorted by market capitalization:

  • Amazon (AMZN)
  • Netflix (NFLX)
  • Charter Communications (CHTR)
  • TAL Education Group (TAL)
  • British American Tobacco (BTI)
  • Constellation Brands (STZ)
  • Constellation Brands (STZ/B)
  • Kraft Heinz (KHC)
  • Barclays (BCS)
  • Lloyds Banking Group (LYG)

Of course, revenue and profit dynamics of trade policy represent a complex and multidimensional analysis, and a simple screen based on the relative foreign/domestic revenue composition of sectors and the sector affiliation of individual companies would require additional research for any results you might find interesting.

Investing in themes

While trade disputes can impact businesses, that doesn’t mean you should deviate from your long-term plan. Make sure to seek investments that align with your specific objectives and risk constraints. If one of your objectives is to find investments in a particular type of business or industry, for instance, the screener can help you explore some common investment ideas, which Fidelity.com describes as "themes."

Among the themes you can investigate are 3-D printing, artificial intelligence, big data, cloud computing, drones, fintech, natural foods, robotics, and wind energy. One of the more popular thematic screens on Fidelity.com is mobile payments, provided by Zacks Investment Research. This screen looks for companies with exposure to mobile payments—like processors of mobile payments and technology providers.

As of August 23, here are the top 10 results of this screen, sorted by market capitalization:

  • Apple (AAPL)
  • Alphabet (GOOGL)
  • JPMorgan Chase (JPM)
  • Visa (V)
  • Mastercard (MA)
  • Paypal (PYPL)
  • American Express (AXP)
  • Intuit (INTU)
  • Fidelity National Information Services
  • Fiserv (FISV)

The screen above raises an important point about the use and value of a screener. While those companies have exposure to mobile payments, in many cases, this represents a small percentage of their total revenues. When you are looking for investments in certain industries, consider how significant that theme is to the business you are evaluating.

Founder run

Another thematic screen that you might consider exploring is "founder run." Lately, some well-known company founders have been in the news often, causing significant gyrations in their stock values in high profile cases.

Some investors believe that companies run by their founder may have an intrinsic advantage over others that are not run by the founder. This perception may be due to a supposed competitive advantage a founder might have, relative to a non-founder, in experience running the company, a greater desire to have the company succeed, and incentives and motivation that not only prompt them to take the long view for the business, but also align their interests more closely with those of shareholders. This screen is produced by Zacks Investment Research, who suggests there is some empirical research that points to founder-run companies outperforming peer companies run by "professional leaders."

As of August 23, here are the top 10 results of this screen, sorted by market capitalization:

  • Amazon (AMZN)
  • Alphabet (GOOGL)
  • Facebook (FB)
  • Nvidia (NVDA)
  • Netflix (NFLX)
  • Salesforce.com (CRM)
  • BlackRock (BLK)
  • Fedex (FDX)
  • Tesla (TSLA)
  • Las Vegas Sands (LVS)

As with the previous screen, it's worth exercising caution when reviewing the results. Simply because a company is run by its founder, that does not mean management is superior relative to professional leaders, or that the company will outperform its non-founder-run peers. Be sure to do your due diligence when evaluating this type of screen.

If you aren't sure where to start

If you are interested in looking for new ideas, but do not have a clear strategy or investment theme to explore, you might consider exploring those in the Most Popular category on Fidelity.com's stock screen page under Strategies.

One such screen is High Quality Dividend Payers from Zacks Investment Research. This screen attempts to find companies with market-beating yields, double-digit growth rates, above median increasing cash flows, and a strong balance sheet. It sorts by dividend yield, earnings per share growth, price-to-earnings ratio, cash flow growth rate, interest coverage, and 90-day volume average.

As of August 23, here are the top 10 results of this screen, sorted by market capitalization:

  • Royal Dutch Shell PLC (RDS/B)
  • Royal Dutch Shell PLC (RDS/A)
  • AT&T (T)
  • BP (BP)
  • Ares Capital (ARCC)
  • EQT GP Holdings (EQGP)
  • Phillips 66 Partners (PSXP)
  • Antero Midstream Partners (AM)
  • Janus Henderson Group (JHG)
  • Norbord (OSB)

Growth at a reasonable price

Another Most Popular screen under Strategies is Recognia's Stocks according to GARP. This screen attempts to find stocks based on the central idea put forth by Benjamin Graham—one of the most famed investors in history—in his seminal work The Intelligent Investor. Graham described a way to search for long-term investment opportunities that are currently trading at reasonable prices, based on several fundamental selection criteria. Recognia's screen uses the 5-year earnings growth rate, trailing price-to-earnings ratio, price-to-book ratio, current ratio, and 5-year average dividend growth rate.

As of August 23, here are the top 10 results of this screen, sorted by market capitalization:

  • Broadcom (AVGO)
  • LyondellBasell Industries (LYB)
  • Nucor (NUE)
  • Westlake Chemical (WLK)
  • Packaging Corp of America (PKG)
  • Newell Brands (NWL)
  • Steel Dynamics (STLD)
  • Ingredion (INGR)
  • Reliance Steel & Aluminum (RS)
  • MKS Instruments (MKSI)

Due diligence

As previously noted, more research is needed to determine if any of these stocks are right for your specific strategy. You should fully understand the risks involved, and each investing opportunity should be considered within the context of a well-diversified investment strategy that conforms to your specific time horizon, objectives, and risk parameters.

Next steps to consider

Find new investing ideas and get up-to-the-minute market data.

Learn what you need to know before trading the market.

Learn more about thematic investing.

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Past performance is no guarantee of future results.

Technical analysis focuses on market action — specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.

The Fidelity Stock Screener is a research tool provided to help self-directed investors evaluate these types of securities. The criteria and inputs entered are at the sole discretion of the user, and all screens or strategies with preselected criteria (including expert ones) are solely for the convenience of the user. Expert Screeners are provided by independent companies not affiliated with Fidelity. Information supplied or obtained from these Screeners is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell securities, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy or approach to screening or evaluating stocks, preferred securities, exchange-traded products, or closed-end funds. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from its use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation, and other individual factors, and reevaluate them on a periodic basis.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.
Zacks Investment Research, Recognia, and Fidelity Investments are independent entities and are not legally affiliated.
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