Archive for December, 2023
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The 2024 Buy List
Eddy Elfenbein, December 31st, 2023 at 9:05 pmHere are the 25 stocks for the 2024 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 2023. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.
It’s locked and sealed, and I can’t make any changes for 12 months.
Here are the five new buys with their starting Buy Below prices:
American Water Works ($140)
Amphenol ($110)
Farmer Mac ($200)
McGrath RentCorp ($130)
Rollins ($50)The six sells are:
Carrier Global
Danaher
Middleby
Stepan
Trex
VeraltoHere are the corporate descriptions of our five new stocks:
American Water is the largest regulated water and wastewater utility company in the United States. With a history dating back to 1886, We Keep Life Flowing® by providing safe, clean, reliable and affordable drinking water and wastewater services to more than 14 million people with regulated operations in 14 states and on 18 military installations. American Water’s 6,500 talented professionals leverage their significant expertise and the company’s national size and scale to achieve excellent outcomes for the benefit of customers, employees, investors and other stakeholders.
As one of the fastest growing utilities in the U.S., American Water expects to invest $34 to $38 billion in infrastructure repairs and replacement, system resiliency and regulated acquisitions over the next 10 years. The company has a long-standing history of executing its core operations, aligned with sustainable best practices, through its commitments to safety, affordability, customer service, protecting the environment, an inclusive workforce and strengthening communities.
Amphenol Corporation is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in approximately 40 countries around the world and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. Amphenol has a diversified presence as a leader in high-growth areas of the interconnect market including: Automotive, Broadband Communications, Commercial Aerospace, Industrial, Information Technology and Data Communications, Military, Mobile Devices and Mobile Networks.
Farmer Mac is a vital part of the agricultural credit markets and was created to increase access to and reduce the cost of credit for the benefit of American agricultural and rural communities. As the nation’s secondary market for agricultural credit, we provide financial solutions to a broad spectrum of the agricultural community, including agricultural lenders, agribusinesses, and other institutions that can benefit from access to flexible, low-cost financing and risk management tools. Farmer Mac’s customers benefit from our low cost of funds, low overhead costs, and high operational efficiency.
McGrath RentCorp is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.
Rollins, Inc. is a premier global consumer and commercial services company. Through its family of leading brands, the Company and its franchises provide essential pest control services and protection against termite damage, rodents, and insects to more than 2.8 million customers in North America, South America, Europe, Asia, Africa, and Australia, with more than 19,000 employees from more than 800 locations. Rollins is parent to Orkin, HomeTeam Pest Defense, Clark Pest Control, Northwest Exterminating, McCall Service, Trutech, Critter Control, Western Pest Services, Waltham Services, OPC Pest Services, The Industrial Fumigant Company, PermaTreat, Crane Pest Control, Missquito, Fox Pest Control, Orkin Canada, Orkin Australia, Safeguard (UK), Aardwolf Pestkare (Singapore), and more.
In terms of market value, Thermo Fisher remains our biggest stock at $205 billion. Abbott Labs is second at $191 billion. Eleven of the 25 stocks have market values between $15 billion and $50 billion. Miller Industries is still our smallest stock at $484 million.
FICO and Fiserv are the only two stocks that don’t pay dividends.
Twenty-one of our 25 stocks are on the normal March/June/September/December reporting cycle. Intuit, SAIC and Heico are on the January/April/July/October cycle. FactSet is the only one that follows February/May/August/December.
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The 2023 Buy List
Eddy Elfenbein, December 31st, 2023 at 1:41 pmThe 2023 investing year is on the books!
This was a good year for Wall Street. The stock market rode out the last of a long line of interest-rate hikes from the Federal Reserve. The labor market remained strong, and inflation appears to be fading. At least, for now.
The stock market did well in 2023, but returns were very uneven. This was an odd year. About 70% of the stocks in the S&P 500 lagged the index in 2023. Growth outpaced Value, and the large-cap tech sector did especially well. The Nasdaq gained more than 43%, and the Nasdaq 100 was up over 53%. All eyes seemed to be focused on the “Magnificent Seven” (AMZN, AAPL, GOOG, NVDA, META, MSFT and TSLA).
I’m pleased to say that the 2023 Buy List performed well, especially without holding any of the Mag 7. For the year, our Buy List gained 25.12%. Including dividends, we were up 26.58%. For the year, the S&P 500 gained 24.23%. Including dividends, the index was up 26.29%. That means we just slightly beat the stock market, but we did it with a lot less risk.
For the 18 years of the Buy List, the S&P 500 with dividends is up 447.04%, while our Buy List is up 573.30%.
In 2023, the Buy List had a “beta” of 0.9394.
Here’s a look at our Buy List versus the S&P 500 throughout the year (this doesn’t include dividends).
Trex was our top-performing stock last year, with a gain of 95.58%. FICO was our second-biggest winner, with a gain of 94.46%. FICO was our biggest winner in 2022, while TREX was #1 in 2020 and 2021.
Hershey was our biggest loser in 2023. The chocolatier lost 19.49%. Stepan was our worst stock for most of the year, but a late-year rally pushed it to a loss of only 11.19%.
Our new buys gave us a big lift in 2023. Celanese was up 51.97%, and Intuit rallied 60.59%. Middleby gained 9.91%, while Polaris lost 6.17% and Cencora gained 23.94%.
What about last year’s sells? It was a mixed bag. Zoetis gained 34.68% in 2023. That was followed by Sherwin-Williams at 32.42%. Ross Stores gained 19.23%. Church and Dwight was up 17.31%, and Reynolds Consumer Products lost 10.47%.
Trex and Stepan will leave us after four years on the Buy List. Danaher was a member for the last seven years, and it was an outstanding performer. During that time, Danaher nearly tripled for us, and that doesn’t include the Veralto spinoff.
I always strive to be as transparent as possible when discussing our track record. Here’s a breakdown of how our Buy List performed in 2023. For tracking purposes, I assume the Buy List is a $1 million portfolio and that all 25 stocks are equally weighted at the start of the year.
For Veralto, shareholders of Danaher got one share of VLTO for each three shares of DHR they owned.
Here’s the data behind the dividend-adjusted returns. I’ve listed each stock’s beginning price, ending price and dividend-adjusted starting price.
In the chart above, I used Danaher’s starting price adjusted for the VLTO spinoff. I didn’t include Veralto’s small dividend paid in December. In terms of our tracking portfolio, it was a negligible amount.
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Every Buy List Stock
Eddy Elfenbein, December 31st, 2023 at 9:18 amHere are all 106 Buy List stocks and when they made the cut.
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His