Forum: the 15% filter and low debt to hunt for stock bargains

Bargain hunters in the stock market: the 15% filter and zero debt

The brief was simple and ambitious at the same time: find companies growing more than 15%, with barely any debt, solid fundamentals and trading below their historical average. The starting point was a personal bet on Meta, on the argument that it was «as cheap as it gets». From there, the list of candidates became a stylistic exercise mixing tech giants, pharmaceutical companies with a checkered history and the odd dubious penny stock.

On paper, the filter is the value investor's holy grail. In practice, the screen exposed an uncomfortable truth: almost no quality company trades cheap at the same time. Those that meet the first three requirements usually have the fourth through the roof. And those that are dirt cheap usually hide a declining business, an accounting hole or a story nobody wants to buy.

The candidates that came up most often

Among the repeated suggestions, ASML appeared with the argument that «it's being given away», a thesis that clashes with the reality of a stock that has rarely traded at bargain multiples. Alphabet and Meta topped the lists of those seeking growth at a reasonable price, while Intel slipped in despite acknowledging it didn't fully meet the requirements. The Spanish pharmaceutical company Pharmamar divided opinion: some see it as a future opportunity, others recall the history of collapses of its predecessor.

The list of names that fell far short of the standard was, at the very least, entertaining. Pescanova, Nueva Rumasa, Afinsa and even Gowex came up — the perfect example of how a company can look impeccable on paper until it stops looking that way. The mention of Onlyfans and a Blockbuster video rental store made it clear that not everyone took the exercise equally seriously.

The problem with value: cheap isn't always good

The discussion drifted toward a deeper issue: the difficulty of finding real value in a market that has rewarded growth for years. Some argue that quality companies —Medtronic, PayPal, Etsy, Hermes, Nvidia, Adidas— are still expensive and that only Adidas is starting to look interesting. The most optimistic calculation assumes the correction is near; the pessimistic scenario starts from a 50% drop that hasn't arrived yet.

The case of Garmin served to illustrate the value trap. The company has managed to transition into wearables, offsetting the decline of its automotive business with new categories. But the doubt lingers: could it be another Blackberry or Nokia waiting for its moment? The answer isn't written, and that is precisely what makes the market an uncomfortable place.

The metaverse, the P/E ratio and all their troubles

The conversation also touched on the metaverse craze, that concept promising to revolutionize everything and which so far has only served to justify billion-dollar investments by some tech companies. Someone asked about the P/E ratio, that metric everyone cites and few apply rigorously. The answer, as almost always, is that it depends on the sector, the point in the cycle and how much faith you have in the future.

The mention of Berkshire Hathaway and Royalty Pharma —with Buffett as endorsement— added a touch of respectability to a list that also antiestéticatured Pfizer and Raytheon. The consensus, if it can be called that, is that the moment to buy quality bargains hasn't arrived. Or it did, and nobody dared to press the button.

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The Spanish stock market had its moment with Pharmamar, a bet that generates as much enthusiasm as wariness. The argument in favor is a promising future if a key drug gets approved; the argument against is that this future has been promised for years and the suffering, meanwhile, is dreamlike. The warning that «without that approval, the suffering can be dreamlike» sums up well the love-hate relationship many investors have with the stock.

In the end, the question hanging over the whole exercise is whether anything actually meets all four requirements at once. The most honest answer given was: «Right now there's nothing». And in a market that has been rising for years, that is a signal worth not ignoring.