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Screening Beverage and Alcohol Stocks with RSI and Five-Year ROE

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Summary

This stock-selection approach filters for companies in the beverage and alcohol import-export industry, a 14-period RSI below 65, and return on equity above 15% for five consecutive years. It combines a price-based indicator with an industry classification and a profitability measure, aiming to find firms with sustained earnings quality while avoiding stocks at a high RSI reading. The document provides formula and Python-style examples for applying the conditions.

The article offers no backtest, portfolio results, or evidence that the screen produces excess returns. Its explanation also treats RSI below 65 as an oversold condition, though that threshold alone does not establish oversold prices or a reversal. It notes that ROE can change with market and industry conditions, RSI may lag price movements, and industry labels group firms with differing risks. Suggested additions include trend measures and further company metrics, but these are not specified as validated rules.

Key ideas

  • The screen requires a 14-period RSI below 65 and membership in the beverage and alcohol import-export industry.
  • It also requires ROE above 15% in each of the previous five years.
  • The method combines a technical indicator with industry and profitability filters.
  • The document warns that ROE can change, RSI can lag, and industry classifications conceal differences among stocks.
  • No backtest or return evidence is provided for the selection rules.

Tags

EquitiesTechnical indicatorsFactor investing

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.