U.S. All-Star stocks live up to their name - MoneySense

U.S. All-Star stocks live up to their name

The major U.S. stock indexes have enjoyed an impressive run in recent years, but they still don’t come close to the performance of our individual All-Star picks

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Ten years. That’s how long it took our U.S. All-Star stocks to recover from an ill-timed start. After a decade and two quarters a $10,000 invested in an equal weighted basket of MoneySense’s U.S. All-Star Stocks would put you about US$1 ahead of what you would have if you owned the S&P 500 over the same period.

The U.S. All-Stars launched just as the financial markets started to melt down. The fact our loss occurred when we launched meant our stocks had to perform significantly better than the benchmark to make up the lost ground. And they did. Once the markets settled down the U.S. All-Star stocks climbed 374% while the S&P 500 enjoyed its own still-remarkable run of 235%.

Our track record of outperformance has continued in the six months since we selected our U.S. All-Star Stocks. Since October, our top stocks are up almost 15% versusSPDR S&P 500 ETF Trust (SPY), which is up a little more than 10% over the same period. Both value and growth strategies were sure bets over that period, with almost identical returns in-line with our All-Star selections. Out of our 50 Grade-A growth stocks, only three were in the red, while 35 of our picks had double digit returns. Not a bad showing for two quarters.

This is our inaugural quarterly report for the MoneySense All-Star Stocks, which are carefully screened by our own Norm Rothery every October. Every quarter, we’ll update you what’s up and what’s down to better understand what’s driving the current market moves. Don’t mistake this occasional check-in as an attempt to abandon our strategy of buying and holding stocks for a year, after all it’s worked pretty well so far (see chart below).

Still the quarterly check-in is important to help you see if new information emerges that changes your analysis on a stock. We also know investing is stressful and that sitting on your hands according to a strategy is often tougher than making a switch in your portfolio. We hope this update offers you some piece of mind.

There’s not much to complain about. Only one of our 28 U.S. All-Star Stocks lost money since October: GameStop. The video game retailer endured a tough holiday season with same store sales falling 19%. And like many brick and mortar operations, GameStop has struggled to keep up with rising online competition.

Based on the fundamentals as they looked in mid-October GameStop will remain an All-Star stock until we revise our line-up in another six months. It’s up to you to decide if it’s time to make any changes to your own portfolio.

Top 5 All-Stars


Price (April 18) Total return through 6 months Dividend yield Price-to-earnings Price-to-book
Republic Services Inc (RSG) $26.46 26.5 2.0 28.9 2.8
Huntington Ingalls Industries Inc (HII) $24.86 24.9 1.2 19.9 5.6
Unum Group (UNM) $24.22 24.2 1.7 11.9 1.2
PulteGroup Inc (PHM) $23.22 23.2 1.5 11.2 1.6
WR Berkley Corp (WRB) $19.92 19.9 0.8 20.9 1.6

Source: Bloomberg, April 18, 2017

Top 5 Grade A Value Stocks


Price (April 18) Total return through 6 months Dividend yield Price-to-earnings Price-to-book
Western Digital Corp (WDC) $84.56 55.6 2.4 33.3 2.3
Bank of America Corp (BAC) $23.55 40.6 1.3 14.1 1.0
Citizens Financial Group Inc (CFG) $36.48 36.8 1.5 17.3 0.9
Anthem Inc (ANTM) $169.43 36.2 1.5 15.8 1.8
M&T Bank Corp (MTB) $158.02 33.0 1.9 19.2 1.6

Source: Bloomberg, April 18, 2017

Top 5 Grade A Growth Stocks


Price (April 18) Total return through 6 months Dividend yield Price-to-earnings Price-to-book
United Rentals Inc (URI) $113.46 56.8 - 18.1 5.5
Sanmina Corp (SANM) $39.30 38.5 - 18.1 1.8
Southwest Airlines Co (LUV) $56.50 31.1 0.7 15.1 4.3
Ingersoll-Rand PLC (IR) $84.19 27.4 1.9 20.4 3.3
Republic Services Inc (RSG) $63.79 26.5 2.0 28.9 2.8

Source: Bloomberg, April 18, 2017

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