First Zweig Screen of the JSE

We now proudly present the first ever Zweig screen for the JSE. We screened for stocks that met Zweigs' "consistant turnover and EPS growth" criteria for the last 3 years (taken from last 3 sets of results as opposed to Zweigs' 4)

1. Average annual turnover growth for last 3 years > than 15%
2. Average annual EPS growth for last 3 years > than 20%
3. Minimum annual turnover growth for any of last 2 years > than 10%
4. Minimum annual EPS growth for any one year > than 20%
5. PE greater than or equal to 2

The above 4 criteria only yielded 17 stocks shown in the table below, a sure sign of the struggle to maintain earnings growth in the recent year. Since Zweig's writings only refer to "consistant EPS growth", which is a little "broad", we decided to divide the stocks into 4 categories :

1. those showing accelerating EPS growth for the 2nd & 3rd years
2. those showing accelerating EPS growth for the 3rd year only
3. those showing accelerating EPS growth for the 2nd year only
4. those showing declining EPS growth for the 2nd & 3rd years

Note that even category 4 above could be defined as "consistant EPS growth" since in each case growth is above 20% for each year, and indeed in some cases even above 100% even though it is declining each year.

We then entered the 2nd phase of the Zweig Screen, represented by a "1" or a "0" in the last two columns of our Zweig Screen table, namely looking for the following:

1. Debt:Equity ratio less than 33%
2. Debt:Equity ratio less than average for the stocks' sector
3. PE ratio at not more than 60% premium to the stocks' sector average

The table appears below:

Note that only 6 stocks meet all the Zweig criteria, (look for a "1" in both the DE and PE columns). Only 1 stock meets all the criteria and is showing consistant and accelerating EPS growth for the entire review period. There are 2 stocks that showed accelerated EPS growth in the most recent year and 1 stock that slowed in the recent year but accelerated in the 2nd year. There are 2 stocks that have shown consistant but declining EPS growth.

Note that on a daily basis, a stocks' share price will drive PE which will drive inclusion/exclusion from the Zweig rankings. Also, results (be they interims or finals but we are only looking at finals) will drive EPS, Turnover and DE inputs and will also trigger inclusion/exclusion from the rankings. We will publish the table quarterly to cater for all these changes as well as track the share appreciation of the "Zweig Screen" portfolio of stocks.