Using the Piotroski Score to Filter All-Time High Stocks

Yesterday I posted a list of 166 all-time highs from last week. We're always looking for ways to outperform the market, and one tool in the tool-belt is to combine technical analysis (i.e., charts) and fundamental analysis (i.e., the underlying business). All-time high stocks are, by any definition, in an uptrend, and have no overhead resistance. This puts us in a good starting point from a technical analysis perspective. Now, for the fundamental analysis one metric is the Piotroski score that was developed by professor Joseph Piotroski and is calculated online at The Graham Investor, an excellent value-investing site. Piotroski scores range from zero to nine, with nine being the best. His research identified:

"stocks that scored eight or nine points as being the strongest stocks. His findings were that these strong stocks as a group outperformed a portfolio of all value stocks by 7.5% annually over a 20-year test period." (source)

CXO Advisory Group - an excellent resource - also reviewed Piotroski's method and concluded:

"In summary, careful screening of value stocks using accounting fundamentals may be able to enhance returns significantly." (source)

I have not found any studies that combine this value score with technical analysis or momentum approaches, but I am interested in learning more about it. If nothing else, I'll do my own research on it.

Applying the score to last week's list, here are the few stocks with scores of 7 or better:

Piotroski Score (Higher is Better)
Score Tickers
7         AZO,BKE,DRI,DV,HI,KOF,MMS,SXI,UGI,V,VAL,AAPL,SAFM,
8         NVO,PRGO,
9         None

And the charts of the two sevens:

Novo Nordisk A/S


Perrigo Co.