Zacks.com Featured Expert Kevin Matras Highlights the Following Stocks: Superior Energy Services, Telephone & Data Systems, Inc. and MeadWestvaco Corp.

CHICAGO -- Zacks.com releases it's exclusive Screen of the Week report that highlights another successful stock picking strategy developed with their Research Wizard software. Kevin Matras dispels the 'magic numbers' myth and looks at how to use Relative Valuations for finding 'undervalued' stocks on the move. See how it's done and get three new 'value' stocks that look ready to breakout. Some stocks in this week's screen are: Superior Energy Services, Inc. (NYSE:SPN), Telephone & Data Systems, Inc. (NYSE:TDS) and MeadWestvaco Corp. (NYSE:MWV). 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:

"'Magic Numbers'? and Relative Valuations"

So many people Kevin speaks to seem to believe there are some magic numbers out there that equate to stock picking success. Two things in particular that he hears over and over again when he's helping people with their screening strategies, relates to P/E Ratios and Price/Book Values.

For some reason, many people believe that P/E Ratios of 20 or less and Price/Book Values of 1 or less are these so-called magic numbers. Unfortunately, statistics prove otherwise. Looking at the best performing stocks since the beginning of the year, (as qualified by stocks that were trading at $5 or higher at the beginning period, traded on average of 50,000 shares a day and that have increased in price by 50% or greater YTD), the average P/E Ratio at that time (using 12 mo. EPS Actuals), was over 33.

That's more than 1 1/2 times the 'magic P/E numbers'. And the average P/E ratio for those stocks now is over 41. More than twice that of the 'magic numbers'. True, there were/are stocks in there with P/E's under 20, but you would've missed a lot of fantastic winners if you excluded those over 20.

As for the average Price/Book Value, it was over 4 at the beginning of the period and now more than 5. In fact, only 1 stock out of the 67 stocks on that list currently has a Price/Book Value of 1 or less. So if you insist on looking for stocks with 'low' valuations (P/E, P/B), try looking for 'low' valuations as compared to their Industries. Why? Because 70% of the stocks on that list of winners had P/E's under the average for their Industry and close to 60% had P/B's under the average for their Industry. So instead of thinking about 'low' valuations as an absolute number, try thinking about them as a relative measure. And Kevin has found that companies that are outperforming their Industries on earnings but are 'undervalued' to their group in terms of valuations are great candidates.

So this week, he's looking for companies with upward price momentum that are trading over $5, have a minimum average trading volume of 50,000 shares a day, have shown greater EPS growth over the last 2 quarters than their Industry's average and have lower P/E's and Price/Book Values than their Industry's average.

Here's a few from that screen that look ready to breakout;

SPN  Superior Energy Services, Inc.
TDS  Telephone & Data Systems, Inc.
MWV  MeadWestvaco Corp.

Try incorporating some of these ideas into your own stock picking strategies. And while relative valuations aren't available in most screeners, they are available in the Research Wizard. (Not to mention 650 other items too).

Click here to learn more about the Research Wizard stock picking and backtesting software and to sign up for a free trial. http://at.zacks.com/?id=110

And remember, the key to successful screening is in discovering those screens that have produced profitable results in the past. And that's exactly what you get with the powerful backtesting ability of Research Wizard. Click here to find out more about our free trial to this profitable stock selection tool: http://at.zacks.com/?id=111

About Screen of the Week

Zacks.com created the first and best screening system on the web and that's what earned us the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why we created the Screen of the Week to highlight profitable stock picking strategies that you can actively employ on your own. Each week we share a new screening strategy in our Profit from the Pros free email newsletter. Learn more about it here http://at.zacks.com/?id=112

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