Zacks.com Featured Expert Kevin Matras Highlights: Main Street Restaurant Group and World Air Holdings.

CHICAGO -- Kevin Matras goes over one of his favorite strategies for finding cheap stocks with big returns. Stocks in this week's article are: Main Street Restaurant Group, Inc. (NASDAQ:MAIN) and World Air Holdings, Inc. (NASDAQ:WLDA). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

The premise behind this screen is to try and find cheap stocks (stocks at or less than $15) that are trading at (preferably, consolidating at) just under their 52 week high, in an effort to 'get on board' before they break-out to new highs. In other words, Kevin wants the stocks to be near their highs, but most of all, he's looking for stocks that have been turned back from their recent highs, ... have consolidated their advances on their trek back to those highs, ... and are just now starting to make a run at their 52 week high again.

Kevin is a big fan of getting into basing patterns (relatively narrow trading ranges) after an uptrend has been established. And especially near recent price highs, since stocks making new highs tend to make even higher highs. And while it's true, some of the stocks that make it thru this screen have already broken-out, Kevin has found this screen to be an ideal strategy for finding low priced stocks with a high probability of success.

The Parameters:

Price less than or equal to $15
(Cheap stocks.)

Zacks Rank equal to 1
(The Zacks Rank has proven to be one of the best if not THE BEST
rating system out there. And looking for number one's helps solidify
the current earnings picture.)

Current Price/52 Week High greater than or equal to .90
(They have to be trading within 10% of the 52 Week high.)

% Change in Price over 4 Weeks greater than or equal to 10% but not
more than 20%
(Kevin is looking for stocks on the move, but not ones that have moved
so much, so quickly, a correction could be in store. Since 10% seems
to get people's attention while follow-thru at 20%, typically signals
the beginning of a 'trend' or a 'breakout', Kevin wanted to be alerted
BEFORE a breakout was seen.)

Beta less than or equal to 2
(Active stocks are good, but wildly volatile ones are not.)

Kevin originally created this strategy to be rebalanced every week. But he has also successfully tested it using a 4 week rebalancing period as well.

For this report, Kevin ran four separate tests, using a four week rebalancing period over the last 3 yr. time span (2002 thru 2004). (Each run was rebalanced over different four week periods to eliminate coincidence and verify robustness.). The results show that over the last 3 years, the average annualized gross return is over 72%. And it has an average win ratio (winning periods divided by the total number of periods) of 75%.

Using a 1 week rebalancing period, the annualized gross return over the last three years is over 85%, with a win ratio of nearly 70%.

This screen generally will produce only 2-3 stocks per period (regardless of rebalancing frequency) and admittedly, there will be periods where literally no stocks will qualify. When this happens, Kevin will typically continue running the screen day after day until something comes thru and he'll consider any stock that ultimately comes up.

Two stocks made it through this week (5/9/05). They are;

MAIN   Main Street Restaurant Group, Inc.
WLDA   World Air Holdings, Inc.

Want to know what it picks next week? Then sign up for your free trial to the Research Wizard now. http://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112

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