Ask Colin

When is the best time to do a scan of fundamentals looking for value stocks?

The main ratios we scan are PE ratio, Dividend Yield and Price to NTA. They are all dependent on price. Therefore they change all the time and we could run the scans quite frequently if we were looking for the first time a stock pops up.

However, if a stock is not on a value scan today, the only way it can get onto the list tomorrow is if its price goes down or the fundamentals improve. Assuming there is no change in fundamentals, it can only be because the price has gone down. Now, because we are looking to buy breakouts from accumulation zones, there is no hurry with stocks whose price is falling. So, the critical times are when fundamentals change.

Most Australian companies balance their books June 30, so they report interim results as at December 31 and final results as at June 30. These results have to be reported to the exchange by dates set in March and September. I have already answered a question on the Ask Colin page on my web site about the reporting season. See also www.asx.com.au for the dates for the current year. It takes the data services and newspapers a week or so to catch up, so running the scan early April and Early October is about right.

Then all we have to worry about are those companies with years ending at other times than June 30 - there are quite a few, but not a huge number. Some are important companies, though. I watch for their profit reports in the AFR. However, if you don't watch the media, you could run the scan at the end of each month. That will be plenty often enough.

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