CWS Market Review – January 1, 2021
Happy New Year!
The 2020 trading year has come to a close. This was a very difficult year for many of us. I’ll admit that I’m not sorry to see 2020 go. I’ll get to our performance in 2020 in a bit, but first let’s look at the 2021 Buy List.
The 2021 Buy List
Here are the 25 stocks for the 2021 Buy List. It’s locked and sealed, and I can’t make any changes for 12 months.
For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided among 25 stocks. Below are all 25 positions with the number of shares for each and the closing price for 2020. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.
| Company | Ticker | Price | Shares | Balance |
| Abbott Laboratories | ABT | $109.49 | 365.330167 | $40,000.00 |
| AFLAC | AFL | $44.47 | 899.482797 | $40,000.00 |
| Ansys | ANSS | $363.80 | 109.950522 | $40,000.00 |
| Broadridge Financial Solutions | BR | $153.20 | 261.096606 | $40,000.00 |
| Cerner | CERN | $78.48 | 509.683996 | $40,000.00 |
| Check Point Software | CHKP | $132.91 | 300.955534 | $40,000.00 |
| Church & Dwight | CHD | $87.23 | 458.557836 | $40,000.00 |
| Danaher | DHR | $222.14 | 180.066625 | $40,000.00 |
| Disney | DIS | $181.18 | 220.774920 | $40,000.00 |
| FactSet | FDS | $332.50 | 120.300752 | $40,000.00 |
| Fiserv | FISV | $113.86 | 351.308625 | $40,000.00 |
| HEICO | HEI | $132.40 | 302.114804 | $40,000.00 |
| Hershey | HSY | $152.33 | 262.587803 | $40,000.00 |
| Intercontinental Exchange | ICE | $115.29 | 346.951167 | $40,000.00 |
| Middleby | MIDD | $128.92 | 310.269935 | $40,000.00 |
| Miller Industries | MLR | $38.02 | 1,052.077854 | $40,000.00 |
| Moody’s | MCO | $290.24 | 137.816979 | $40,000.00 |
| Ross Stores | ROST | $122.81 | 325.706376 | $40,000.00 |
| Sherwin-Williams | SHW | $734.91 | 54.428433 | $40,000.00 |
| Silgan | SLGN | $37.08 | 1,078.748652 | $40,000.00 |
| Stepan | SCL | $119.32 | 335.232987 | $40,000.00 |
| Stryker | SYK | $245.04 | 163.238655 | $40,000.00 |
| Thermo Fisher | TMO | $465.78 | 85.877453 | $40,000.00 |
| Trex | TREX | $83.72 | 477.783086 | $40,000.00 |
| Zoetis | ZTS | $165.50 | 241.691843 | $40,000.00 |
| Total | $1,000,000.00 |
The five new stocks are Abbott Laboratories (ABT), HEICO (HEI), Miller Industries (MLR), Thermo Fisher Scientific (TMO) and Zoetis (ZTS).
The five sells are Becton, Dickinson (BDX), Eagle Bancorp (EGBN), Globe Life (GL), Hormel Foods (HRL) and RPM International (RPM).
Disney (DIS) is our largest stock, with a market cap of $328 billion. The Buy List is mostly large- and mid-cap stocks. Miller Industries (MLR) is our smallest stock, with a market cap of $434 million. Stepan (SCL) is the next smallest, and it’s six times larger than Miller.
Only AFLAC (AFL) and Fiserv (FISV) have been on the Buy List all 16 years. This is Stryker’s (SYK) 14th year.
Here are brief descriptions (via Hoovers) of our five new stocks:
With activities ranging from filling baby bottles to making generic medications and cardiovascular devices, Abbott Laboratories (ABT) is a diverse healthcare-products manufacturer. Its cardiovascular and neuromodulation segment makes products for cardiac-rhythm management, electrophysiology and other areas of cardiovascular care. Abbott’s diagnostics division makes laboratory testing systems and point-of-care tests. The nutritional-products division makes such well-known brands as Similac infant formula and Ensure supplements. Abbott also sells branded generic medicines (including gastroenterology and women’s-health products) in emerging markets and makes the FreeStyle diabetes-care line. Buy up to $120 per share.
As one of the world’s largest independent providers of aircraft replacement parts, HEICO Corporation (HEI) helps jets get airborne. Its flight-support group makes FAA-approved replacement parts for jet engines that can be substituted for original parts, including airfoils, bearings and fuel pump gears. Flight support also repairs, overhauls and distributes jet engine parts, as well as avionics and instruments for commercial air carriers. HEICO’s second segment, the electronic-technologies group, makes a variety of electronic equipment for the aerospace/defense, electronic, medical and telecommunications industries. The company generates about 65% of its revenue in the US. Buy up to $140.
This body builder wants to pump up your chassis. Miller Industries (MLR) makes bodies for light- and heavy-duty wreckers, along with car carriers and multi-vehicle trailers. It serves as the official recovery team at some of the NASCAR races (including Talladega), as well as the Indy 500 races. Miller makes its recovery and towing vehicles at plants in the US and Europe. Its multi-vehicle transport trailers can carry as many as eight vehicles and loads of up to 75 tons. Miller Industries’ US brand names include Century, Challenger, Champion, Chevron, Eagle, Holmes, Titan and Vulcan. The company’s European brands are Jige (France) and Boniface (UK). Miller and rival Jerr-Dan dominate the US market for wrecker bodies. Buy up to $42.
Thermo Fisher Scientific (TMO) preps the laboratory for research, analysis, discovery or diagnostics. The company makes and distributes analytical instruments, scientific equipment, consumables and other laboratory supplies. Products range from chromatographs and spectrometers to Erlenmeyer flasks, fume hoods and gene sequencers. Moving into other areas, it also offers testing and manufacturing of drugs, including biologicals. Thermo Fisher also provides specialty diagnostic testing products, as well as clinical analytical tools. The company tallies more than 400,000 customers worldwide. Its key markets are pharmaceutical and biotech, diagnostics and health care, academic and government, and industrial and applied research. Nearly half of the company’s sales were generated in the US. Buy up to $490.
Whether you have cats or cattle, Zoetis (ZTS) has medicines to keep them healthy. The company manufactures and sells veterinary products such as parasiticides (to protect against fleas, ticks and worms), anti-infectives, medicated feed additives, vaccines and other pharmaceuticals for companion and farm animals. Zoetis boasts more than 300 product lines sold in more than 100 countries around the world, making it one of the world’s largest animal-health businesses. In addition to medications and vaccines, Zoetis offers diagnostics, genetic tests, biodevices and a range of services. About half of the company’s total revenue is generated from the US. Buy up to $180.
The 2020 Buy List
Now let’s look at how we did last year. For 2020, the S&P 500 gained 16.26% while our Buy List gained 16.79%. However, once we include dividends, then the S&P 500 gained 18.40% while our Buy List gained 17.93%.
So we lost to the overall market by less than 0.5%. In our defense, we managed to keep with the market in a very difficult year. We didn’t own any of the tech behemoths that saw tremendous gains in 2020. To give you an example, the S&P 500 Equal Weight index, which weighs every member the same, gained 10.47% in 2020. That means we beat most stocks.
For the long-term, we’ve done quite well. Over the last 15 years, our Buy List has gained 383.05% while the S&P 500 has gained 311.00%.
Our biggest winner in 2020 was Trex (TREX), which gained over 86%. Danaher (DHR) and Ansys (ANSS) were second and third, respectively. AFLAC (AFL) was our worst performer in 2020, which is very unusual for the duck stock.
For people who care about such things, the “beta” of our Buy List in 2020 was 0.9246. The correlation of the daily changes of the Buy List to the changes of the S&P 500 was 96.52%.
The chart below details our Buy List’s performance. I’ve listed each stock, along with the number of shares and the starting and ending prices. For tracking purposes, I assume the Buy List is a $1 million portfolio that starts out equally divided among the 25 stocks.
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His