John Reese selects stocks based on the long-standing investment strategies of Wall Street's most legendary investors. Here, the editor of Validea, highlights a stock that scores a 100% ranking based on the Growth/Value Investor strategy of James P. O'Shaughnessy.

Insteel Industries (IIIN) is a manufacturer of steel wire reinforcing products for concrete construction applications. Its products are sold to manufacturers of concrete products that are used in nonresidential construction.

The company manufactures and markets PC strand and welded wire reinforcement, including engineered structural mesh, concrete pipe reinforcement and welded wire reinforcement.

Its concrete reinforcing products provides reinforcement for bridges, parking decks, buildings and other concrete structures.

The first requirement of O'Shaughnessy’s Growth/Value approach — known as the Cornerstone Growth Strategy — is that the company has a market capitalization of at least $150 million.

This will screen out the companies that are too illiquid for most investors, but still include a small growth company. IIIN, with a market cap of $652 million, passes this criterion.

The Cornerstone Growth methodology then looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company's earnings must increase each year for a five year period.

IIIN, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were -0.02, 0.10, 0.64, 0.89 and 1.16, passes this test.

The Price/Sales ratio should be below 1.5. This value criterion -- coupled with the growth criterion -- identify growth stocks that are still cheap to buy.

Insteel's Price/Sales ratio of 1.50, based on trailing 12 month sales, passes this criterion.

The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion.

This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. IIIN, whose relative strength is 95, is in the top 50 and would pass this last criterion.

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