In Search of Winning Stocks

This Week: Searching for January Effect Hopefuls
1.  Searching for the Year's Best Nasdaq Stocks
2.  Search Criteria
3.  One January Effect Hopeful
4.  Disclaimer

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Wall Street City,s Stock Search of the Week

1.  Searching for January Effect Hopefuls

The "January Effect" is an oft-discussed phenomenon that
occurs when stocks that have sold off near the end of one
calendar year outperform the broader markets at the
beginning of the following year.   Typically, these stocks
decline late in the calendar year due to tax selling, but
are repurchased after the wash sale period expires.
Candidates for an early calendar year rebound are often those
stocks with favorable fundamental characteristics.

January Effect Hopefuls is a search strategy that screens
for such candidates.  Primary criteria include a negative
26-week return and a market capitalization of between
$50 - $750 million.  The January Effect tends to occur more
often with small to mid-cap stocks than it does with
large-cap stocks.  Utilizing the current ratio and
debt-to-equity criteria in the restrictive mode screens for
balance sheet strength.  Companies with high current ratios
and low debt-to-equity ratios have lower levels of financial
risk.  The two revenue percentage change criteria screen for
companies with acceleration in their quarterly revenue growth
rates.  Positive forecast earnings growth is then sought to
improve the chances that the companies will continue their
growth trends in the future.  As a final criterion, positive
earnings surprises are sought for the past four reported
quarters; companies that have a history of exceeding analysts'
expectations tend to outperform their peers.

Though the search strategy is designed with the January
Effect in mind, it works well throughout the year for
investors who follow contrarian strategies.  Investors who
are eyeing the results with the January Effect in mind should
note that back testing showed material divergences in
individual stock returns, therefore, selecting a basket of
securities instead of one or two stocks may reduce risk.

Click below to see the results.

http://clyde.investools.com/T/A24.133.320.1.42265

2.  Search Criteria

Using WallStreetCity,s ProSearch tool, investors can
build a search like the one below created by WallStreetCity
analysts to find stocks that potential candidates for a
January Effect rebound.

Indicator                      Mode
------------------------------------------------------------
Rel Performance 26 Wk          Between 0.0 - 99.0
Market Capitalization          Between 50.0 - 750.0
Current Ratio                  Between 2.0 - 1000.0
Debt/Equity Ratio              Between 0.0 - 50.0
Rev. Increase Last Qtr         Between 102.0 - 10000.0, High
Rev. Increase 2 Qtr ago        Between 101.0 - 10000.0
Proj EPS Next FY               Between 1.0 - 1000.0, High
EPS Surprise Pos Last 4        Between 4.0 - 4.0

Investors can click below to view screen results.

http://clyde.investools.com/T/A24.133.320.2.42265

3.  One January Effect Hopeful

Shares of Globespan {GSPN} declined by 70 percent during
October and November.  The decline was caused by the mass
exodus out of tech stocks, profit warnings from Lucent {LU}
- a major customer - and comments out of Cisco {CSCO} - also
a customer - that it would be reducing inventory.  Despite
these market events, GSPN has not issued a profit warning
and Bloomberg News Services is reporting that an analyst
with Morgan Stanley Dean Witter is predicting that GSPN will
meet revenue forecasts in 2001.  Though GPSN, a developer of
DSL integrated circuits, continues to trade a P/E ratio
untypical of many January effect candidates, the extent of
the decline could be more than enough to buffer the stock
from a potential earnings warning, creating the possiblity
of a bounce in 2001.

Click below to view screen results.

http://clyde.investools.com/T/A24.133.320.3.42265

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4. Disclaimer

WallStreetCity,s Stock Search of the Week is published
solely for informational purposes and is not a solicitation
or an offer to buy or sell any stock, mutual fund or other
security.  The information obtained from internal and
external sources is considered reliable, but has not been
independently verified for accuracy and completeness.
WallStreetCity, its employees, and/or officers and directors,
may from time to time have a position in the securities
mentioned and may sell or buy such securities.
Trading involves risk, including possible loss of principle
and other losses.  Trading results may vary. No
representations are being made that these techniques will
result in or guarantee profits in trading.  Past performance
is no indication of future results.

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