Zacks.com Featured Expert Kevin Matras Highlights the Following Stocks: BASF AG, Commercial Metals Company, and Giant Industries.

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. This week, Kevin Matras goes over his 'Return on Equity' (ROE) strategy that showed an average annualized gross return of over 89% in 2002, 110% in 2003 and over 60% in 2004. Stocks in this week's screen are: BASF AG (NYSE:BF), Commercial Metals Co. (NYSE:CMC) and Giant Industries, Inc. (NYSE:GI). 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:

"Using Return on Equity (ROE) as part of a Winning Stock Picking Strategy."

This week, Kevin Matras focuses on another winning screening strategy that is both easy to build and easy to use with the Research Wizard program. This one uses the Return on Equity (ROE) as one of the main components in the strategy. ROE is one of the quickest ways to gauge whether a company is creating assets or gobbling up investors' cash.

ROE = income / common equity. For instance; if the ROE is 10%, then ten cents of assets are created for each shareholder dollar that was originally invested. Knowing the company is generating assets on invested capital rather than burning thru it is a great starting point.

So the parameters to this screen are as follows:

ROE greater than or equal to 10 (Companies with no return on shareholder equity are disqualified.)

Zacks Rank equal to 1 (The Zacks Rank, which looks at upward earnings estimates revisions (amongst other things), will get us into companies whose forecasted earnings are getting stronger.)

The Percentage of Analysts Rating it a Strong Buy equals 100% (Since broker ratings are typically skewed wildly to the bullish side, Kevin decided to cancel out any company where the brokers aren't fully on board.)

Price to Sales less than 1 (A low price to sales ratio (below 1.0 for example) is usually thought to be a better value, since the investor is paying less for each unit of sales.)

And for good measure, the price has to be at or above $5. (Many brokers and money managers won't touch anything under $5.)

The results:

Kevin ran a series of tests, using a four week rebalancing period over the last 3 yr. time span. (Each run was rebalanced over a different set of four-week periods to eliminate coincidence and verify robustness.) In 2002, the average annualized gross return was over +89%, with an average win ratio (winning periods) of 79%. The average number of stocks to be held per period was 5. In 2003, the average annualized gross return was 110%, with an 83% win ratio. Once again, it was a very practical strategy to implement, since it generated on average of only 5 stocks per period. And 2004's average annualized return (YTD thru 12/17/04) is up over 60% with a 69% win ratio. Again, holding on average of only 4-5 stocks per period.

This week (1/3/05), there are 3 stocks that qualify this winning screen. They are;

BF BASF AG

CMC Commercial Metals Co.

GI Giant Industries, 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

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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