Recap from October Picks
Our Most Attractive Stocks (-4.3%) underperformed the S&P 500 (-2.2%) last month. Most Attractive Large Cap stock Juniper Networks (JNPR) gained 4% and Most Attractive Small-Cap stock Heartland Financial U.S.A. (HTLF) was up 3%. Overall, 19 out of the 40 Most Attractive stocks outperformed the S&P 500 in October.
Our Most Dangerous Stocks (-4.7%) outperformed the S&P 500 (-2.2%) last month. Most Dangerous Large Cap stock Penske Automotive (PAG) fell by 12% and Most Dangerous Small Cap Stock The Providence Service Group (PRSC) fell by 21%. Overall, 26 out of the 40 Most Dangerous stocks outperformed the S&P 500 in October.
The successes of the Most Attractive and Most Dangerous stocks highlight the value of our forensic accounting as featured in Barron’s. Being a true value investor is an increasingly difficult, if not impossible, task considering the amount of data contained in the ever-longer annual reports. By analyzing key details in these SEC filings, our research protects investors’ portfolios and allows our clients to execute value-investing strategies with more confidence and integrity.
14 new stocks make our Most Attractive list this month and 17 new stocks fall onto the Most Dangerous list this month. November’s Most Attractive and Most Dangerous stocks were made available to members on November 3, 2016.
Our Most Attractive stocks have high and rising returns on invested capital (ROIC) and low price to economic book value ratios. Most Dangerous stocks have misleading earnings and long growth appreciation periods implied by their market valuations.
Most Attractive Stocks Feature for November: Winmark Corporation (WINA: $105/share)
Winmark Corp (WINA), franchisor of retail stores including Platos Closet and Play It Again Sports, is one of the additions to our Most Attractive stocks for November.
Over the past decade, Winmark Corp has grown after-tax profit (NOPAT) by 24% compounded annually, per Figure 1. The company’s NOPAT margin has improved from 10% in 2005 to 35% over the last twelve months (TTM) while its return on invested capital (ROIC) has improved from 14% in 2005 to a top-quintile 42% TTM.
