Archive for December, 2014
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The 2015 Buy List
Eddy Elfenbein, December 31st, 2014 at 8:10 pmHere are the 20 stocks for the 2015 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 20 stocks. Below are all 20 positions with the amount of shares for each and the closing price for 2014. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.
Company Ticker Price Shares Balance AFLAC AFL $61.09 818.4646 $50,000.00 Ball Corp. BLL $68.17 733.4605 $50,000.00 Bed Bath & Beyond BBBY $76.17 656.4264 $50,000.00 Cognizant Technology Solutions CTSH $52.66 949.4873 $50,000.00 CR Bard BCR $166.62 300.0840 $50,000.00 eBay EBAY $56.12 890.9480 $50,000.00 Express Scripts ESRX $84.67 590.5279 $50,000.00 Fiserv FISV $70.97 704.5230 $50,000.00 Ford Motor F $15.50 3,225.8065 $50,000.00 Hormel Foods HRL $52.10 959.6929 $50,000.00 Microsoft MSFT $46.45 1,076.4263 $50,000.00 Moog MOG-A $74.03 675.4019 $50,000.00 Oracle ORCL $44.97 1,111.8523 $50,000.00 Qualcomm QCOM $74.33 672.6759 $50,000.00 Ross Stores ROST $94.26 530.4477 $50,000.00 Signature Bank SBNY $125.96 396.9514 $50,000.00 Snap-on SNA $136.74 365.6575 $50,000.00 Stryker SYK $94.33 530.0541 $50,000.00 Wabtec WAB $86.89 575.4402 $50,000.00 Wells Fargo WFC $54.82 912.0759 $50,000.00 There are five new stocks and five stocks that I’m removing. The five new stocks are Ball Corp. ($BLL), Hormel Foods ($HRL), Signature Bank ($SBNY), Snap-on ($SNA) and Wabtec ($WAB). Here’s a brief description of each.
Ball Corp. ($BLL) is the largest producer of recyclable beverage cans in the world. The company started out making mason jars. While they’re no longer in that business today, Ball makes billions of recyclable metal containers. Based in Broomfield, Colorado, Ball also has an aerospace unit that makes parts for NASA. If you like boring and profitable, you’ll like Ball.
I always think of Hormel Foods ($HRL) as the Spam company. Not as in unwanted emails, but Spam the lunch meat. But Hormel is so much more. They own a bunch of food brands including Dinty Moore stew and Country Crock. More than 30 Hormel bands are ranked #1 or #2 in their markets. Last month, Hormel raised their dividend by 25%. It was their 49th consecutive annual dividend increase. Not bad for lunch meat.
Signature Bank ($SBNY) may be the quietest success story in banking. Signature is never in the news and that’s how they like it. But their performance tells the story. Signature’s loan delinquency rate is about one-tenth of the industry average. They also keep a tight rein on overhead which runs about 40% below industry average. Without anyone noticing, Signature has shaken up traditional banking.
Snap-on ($SNA) is a maker of high-end hand tools and power tools. They also make lots of machines for car repair like hydraulic lifts and tire changers. Snap-on makes products for the marine, rail and aviation industries. Last month, Snap-on raised their dividend by 20.5%. The company is based in Kenosha, WI (birthplace of Orson Welles), and they employ 11,500 people.
Wabtec ($WAB) was formed by the merger of Westinghouse Air Brake and MotivePower in 1999. The company traces its roots back to 1869 when George Westinghouse invented the railway airbrake. (In last week’s issue, I listed the stock as Westinghouse Air Brake Technologies, but Wabtec is the official name.) Wabtec makes locomotives, brakes and other parts for the freight and passenger rail industries. Business is going well; Wabtec recently raised guidance and their backlog is at a record. Barron’s notes that Wabtec is the only stock on any U.S. exchange that’s risen in each of the last 13 years.
The five deletions are CA Technologies ($CA), DirecTV ($DTV), IBM ($IBM), McDonald’s ($MCD) and Medtronic ($MDT).
The average market cap is $69 billion. That ranges from a high of $382 billion for Microsoft ($MSFT) to $3 billion for Moog ($MOG-A).
Thirteen of the twenty stocks pay dividends. The total yield of the Buy List is 1.06%.
Only three stocks have been on the Buy List all ten years: AFLAC ($AFL), Bed Bath & Beyond ($BBBY) and Fiserv ($FISV). Stryker ($SYK) and Moog ($MOG-A) are both making their eighth appearance.
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The 2014 Buy List
Eddy Elfenbein, December 31st, 2014 at 7:20 pmThe 2014 trading year is officially on the books. It was another profitable year for our Buy List. I want to thank everyone for your support. We again showed that a set-and-forget portfolio of high-quality stocks can do well.
Here are the final numbers. For the year, our Buy List gained 10.26%. Including dividends, we were up 11.80%.
Unfortunately, we were beaten out by the S&P 500, but it was close. For 2014, the S&P 500 gained 11.39% and 13.69% when you include dividends. The return from dividends for our Buy List was 1.39% while it was 2.06% for the S&P 500. This was the first time since 2006 that the S&P 500 outperformed our Buy List. For those who care about such things, the Buy List’s “beta” was 0.9361.
Nine of our Buy List stocks were up more than 20%. There was nearly a four-way tie for our top-performing stock of the year. Ultimately, Medtronic ($MDT) edged out Ross Stores ($ROST) 25.81% to 24.80%, while DirecTV ($DTV) and Stryker ($SYK) were right behind tied at 25.54%. Fifteen of our 20 stocks made money last year. The biggest loser was IBM ($IBM) which lost 14.46%.
Over the nine-year history of our Buy List, our total compounded gain, including dividends, is 151.28%. For the S&P 500, the nine-year total return is 99.66%.
The chart below details the 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 equally divided among the 20 stocks.
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His