Only a select number of stocks made it into our All Star team this year. Just 16 of the 500 candidates made the grade. Each earned at least one A and one B on our value and growth tests. You can examine them in the table below.
But before you take a look at the particulars, it’s worth stepping back to consider the team as a whole. The idea being to think of team as a portfolio composed of an equal (dollar) amount of each stock.
The portfolio trades at bargain levels thanks to the value tests we employ. It changes hands at an average of 9.9 times earnings, 0.5 times sales and 1.6 times book value. It pays an average dividend yield of 1.7% and is relatively debt-light with an average leverage of 2.6. It also sports a healthy average return on equity of 18.2%.
On the momentum side of the equation, the average 12-month return for the stocks in the portfolio is generous at 27.7%. Its average three-year earnings-per-share growth rate comes in at 32.4% and revenue-per-share growth clocks in at an average of 13.9% over the same period.
(For the technically minded, harmonic averages were used for the price ratios and arithmetic averages in the other cases.)
Overall, this year’s All Star team sports strong price momentum, generous earnings and sales growth, while trading at bargain levels based on earnings and other metrics. With a little luck the combination will prove to be a profitable one for investors.
This year’s All Stars also offers a fair amount of diversification by industry group and contains just a few pockets of concentration. Two food retailers made the list as did a couple of home furnishing retailers. Media companies were also popular with two making the team this year.
Otherwise the stocks come from different industry groups. Mind you, some are economically related. For instance, Hooker Furniture’s wares are sold via retailers like Haverty Furniture and Bassett Furniture. But, overall, a good number of industry groups are included in this year’s team.
We’d be remiss not to mention the only stock to earn the coveted double-A prize this year. Beasley Broadcast Group heads the class with an A for value and an A for growth. The firm is headquartered in Naples, Florida and operates 63 radio stations in 15 markets in the U.S. with most of its stations near the east coast. It trades at 1.3 times book value and 4 times earnings while paying a 1.9% dividend yield. With a little luck its momentum will continue well into the new year.
We have high expectations for all of this year’s All Stars and hope you’ll find a few that deserve spot in your portfolio.