Screening Profitable Small-Cap Stocks by Range and Positive Earnings

Summary

This note presents a Chinese stock screen for companies with a daily high-to-low range of at least one percent, market value no greater than 10 billion yuan, positive earnings, and a positive price-to-earnings ratio. The accompanying formula further caps the price-to-earnings measure at 20, although the written discussion also suggests comparing valuation with industry averages. A sample Python workflow illustrates filtering market data by range, market value, earnings, and valuation. The document supplies no historical performance results or evidence that the filters improve returns.

The rationale is to combine short-term price movement with smaller company size and basic profitability. The author cautions that emphasizing short-term movement can distract from long-term value, and that a high valuation can still imply overpricing. The note recommends combining financial, technical, and business analysis and considering market conditions. There is a mismatch between the initial screen and its proposed final logic: the latter adds an industry-relative valuation idea not encoded in the formula. That gap, along with absent testing details, limits how reproducibly the strategy can be assessed.

Key ideas

• The proposed screen combines a minimum daily price range, a market-value ceiling, positive earnings, and positive valuation multiples.
• The formula also applies an upper valuation cap, while the narrative proposes an industry-relative valuation filter.
• The document gives a sample data-filtering workflow but no backtest results or return evidence.
• The author notes that short-term price movement and valuation screens can miss long-term company value and market conditions.
• The written final logic and formula differ, so the valuation rule needs clarification before implementation.

Tags

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