Some of the criteria was as follows
1) Enterprise value < 200 million
2) Share count over the prior trailing 12 months being less than the average 5 year annual count.
3)Calculated average annualized prior 5 year free cash flow (04- 08) as a percentage of the current enterprise value and then compare this yield to the yield using the prior 12 months of operating income as a percentage of the current enterprise value.
My goal was to select only those companies selling for a lower earnings yield using the current operating income/enterprise value versus the yield calculated by the average 5 year FCF/EV. The thought was to find stocks that may be temporarily trading at a discount to normalized earnings.
4) Cash flow from operation >0 over the past 12 months.
5) Company share buybacks over 2008 and YTD 2009.
6) Return on invested capital (ROIC) > the annualized return of 20% over the past 5 years.
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