2013 Stock Picks: 11 Out Of 142

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 |  Includes: AAPL, AFL, APO, BLK, CMI, COH, JBSS, MCO, NVS, TER, WDC
by: Dark-Liquidity

We just finished reviewing the performance of the 2012 stock picks made by select brokers, financial publications and independent advisors in this article. In 2013 we will be tracking the performance of stocks selected for the New Year by Fortune, Barron's, RBC Capital Markets, Barclays, BOA - Merrill Lynch, CNN Money, Credit Suisse, Goldman Sachs, JPMorgan, Kiplingers and a group of 15 Star Investors here. Their stock selections are listed below with a link to the original source article in each of their names.

Recommended Stock Ticker Stock Picker
Align Technology ALGN 15 Star Investors
Pentair PNR 15 Star Investors
Public Storage PSA 15 Star Investors
Gilead Sciences GILD 15 Star Investors
Moody's MCO 15 Star Investors
CMS Energy CMS 15 Star Investors
Albany International ALB 15 Star Investors
Verifone Systems PAY 15 Star Investors
U.S.Bancorp USB 15 Star Investors
Ford F 15 Star Investors
Comcast CMCSA 15 Star Investors
Unilever UL 15 Star Investors
Fresenius Medical Care FMS 15 Star Investors
CF Industries Holding CF Barclays
Stillwater Mining SWC Barclays
Air Products & Chemicals Inc. APD Barclays
Sealed Air Corp. SEE Barclays
Beam, Inc. BEAM Barclays
Newell Rubbermaid Inc. NWL Barclays
Kraft Foods Group Inc. KRFT Barclays
Dollar General Corp. DG Barclays
EOG Resources EOG Barclays
EQT Corporation EQT Barclays
Tesoro Corporation TSO Barclays
SM Energy Co. SM Barclays
Halliburton Co. HAL Barclays
Blackstone Group LP BX Barclays
Aflac Inc. AFL Barclays
ACE Limited ACE Barclays
Citigroup Inc. C Barclays
City National CYN Barclays
Essex Property Trust Inc. ESS Barclays
Commerce Bancshares, Inc. CBSH Barclays
American Express AXP Barclays
Ariad Pharmaceuticals ARIA Barclays
HCA Holdings Inc. HCA Barclays
UnitedHealth Group UNH Barclays
Johnson & Johnson JNJ Barclays
Thoratec Corp. THOR Barclays
Watson Pharmaceuticals Inc. WPI Barclays
Southwest Airlines LUV Barclays
Tesla Motors Inc TSLA Barclays
Union Pacific Corp. UNP Barclays
General Dynamics GD Barclays
Delphi Automotive DLPH Barclays
Mohawk Industries MHK Barclays
McGraw-Hill Companies Inc. MHP Barclays
Robert Half International Inc. RHI Barclays
American Public Education Inc. APEI Barclays
Chicago Bridge & Iron CBI Barclays
Cummins Inc. CMI Barclays
Tyco International TYC Barclays
Liberty Global, Inc. LBTYA Barclays
Google Inc. GOOG Barclays
CBS Corp. CBS Barclays
Northeast Utilities NU Barclays
NRG Energy NRG Barclays
Penn National Gaming PENN Barclays
Coach, Inc. COH Barclays
Tiffany & Co TIF Barclays
Darden Restaurants DRI Barclays
Home Depot Inc. HD Barclays
Cheniere Energy Partners LP CQP Barclays
Cisco Systems, Inc. CSCO Barclays
Corning Inc. GLW Barclays
Visa Inc. V Barclays
Apple, Inc. AAPL Barclays
Teradyne Inc. TER Barclays
NXP Semiconductors NV NXPI Barclays
VMware Inc. VMW Barclays
Qualcomm, Inc. QCOM Barclays
América Móvil AMX Barclays
SBA Communications Corp. SBAC Barclays
Apple AAPL Barron's
Barnes and Noble BKS Barron's
Blackrock BLK Barron's
General Dynamics GD Barron's
JPMorgan Chase JPM Barron's
Marathon Petroleum MPC Barron's
Novartis NVS Barron's
Royal Dutch Shell RDS.A Barron's
Viacom VIA Barron's
Western Digital WDC Barron's
Ford F BOA - Merrill Lynch
Wal-Mart WMT BOA - Merrill Lynch
Valero VLO BOA - Merrill Lynch
Citigroup C BOA - Merrill Lynch
Lilly LLY BOA - Merrill Lynch
3M MMM BOA - Merrill Lynch
Cisco CSCO BOA - Merrill Lynch
Mosaic MOS BOA - Merrill Lynch
CenturyLink CTL BOA - Merrill Lynch
Northeast Utilities NU BOA - Merrill Lynch
BorgWarner BWA CNN Money
Home Inns & Hotels Management HMIN CNN Money
Akamai Technologies AKAM CNN Money
Apple AAPL CNN Money
Cheniere Energy LNG CNN Money
Marathon Petroleum MPC CNN Money
First Quantum Minerals FQVLF CNN Money
Whitehaven Coal WHITF CNN Money
Yingli Green Energy YGE CNN Money
Arcos Dorados ARCO CNN Money
Morgan Stanley MS Credit Suisse
Goldman Sachs Group GS Credit Suisse
Apollo Global Management APO Credit Suisse
Carlyle Group CG Credit Suisse
Intercontinental Exchange ICE Credit Suisse
Lazard LAZ Credit Suisse
Align Technology Inc. ALGN Fortune
Pentair Ltd. PNR Fortune
Gilead Sciences GILD Fortune
Moody's Corporation MCO Fortune
VeriFone Systems PAY Fortune
U.S.Bancorp USB Fortune
Ford Motor Company F Fortune
Comcast Corp. CMCSA Fortune
Unilever UL Fortune
Fresenius Medical Care AG FMS Fortune
Halliburton HAL Goldman Sachs
Newfield Exploration Co. NFS Goldman Sachs
Joy Global Inc. JOY Goldman Sachs
Teradata Corporation TDC Goldman Sachs
Owens-Illinois, Inc. OI Goldman Sachs
Denbury Resources Inc DNR JPMorgan
CA Inc CA JPMorgan
Occidental Petroleum Corp OXY JPMorgan
Noble Corp. NE JPMorgan
Tesoro Corp TSO JPMorgan
FedEx Corp. FDX JPMorgan
Dell Inc DELL JPMorgan
Prudential Financial Inc. PRU JPMorgan
Boeing Co. BA JPMorgan
Apache Corp. APA JPMorgan
Halliburton Co. HAL JPMorgan
MetLife Inc. MET JPMorgan
Staples Inc. SPLS JPMorgan
Cardinal Health Inc. CAH JPMorgan
Macy's Inc. M JPMorgan
Peabody Energy Corp. BTU JPMorgan
CF Industries Holdings Inc. CF JPMorgan
Marathon Oil Corp. MRO JPMorgan
Coach COH Kiplinger
Coviden COV Kiplinger
John B. Sanfilippo & Sons JBSS Kiplinger
Qualcomm QCOM Kiplinger
TRW Automotive TRW Kiplinger
Toll Brothers TOL Kiplinger
VMWare VMW Kiplinger
Wells Fargo WFC Kiplinger
Cenveo CVO Kiplinger
Comcast CMCSA Kiplinger
Stryker SYK Kiplinger
New Oriental Education & Tech. Grp. EDU Kiplinger
Kimberly-Clark KMB Kiplinger
U.S.Bancorp USB Kiplinger
Dell DELL Kiplinger
Tangoe TNGO Kiplinger
Reed Elsevier RUK Kiplinger
Ford Motor Company F Kiplinger
Ocwen Financial OCN Kiplinger
Fortress Investment Group FIG Kiplinger
Brookfield Residential Properties BRP Kiplinger
Joy Global JOY Kiplinger
AIG AIG Kiplinger
Brook Asset Management Inc BAM RBC Capital Markets
Magna International Inc MGA RBC Capital Markets
Silver Wheaton Corp SLW RBC Capital Markets
The Tornoto-Dominion Bank TD RBC Capital Markets
TELUS Corporation TU RBC Capital Markets
Valeant Pharmaceuticals Intl VRX RBC Capital Markets
Dollarama Inc DLMAF RBC Capital Markets
TransForce TFIFF RBC Capital Markets
Click to enlarge

You can view stock charts of almost all these selections here.

It is probable that about half of these stocks will not beat the market during 2013. The chart below shows how the pro's stock selections tracked for 2012 fared.

Click to enlarge

Most of the stock performances are clustered around the market averages but you can see that there are significant numbers that performed far better and also far worse.

Stocks that were selected by more than one picker for 2013 are: Apple (NASDAQ:AAPL), Align Technology (NASDAQ:ALGN), Citigroup Inc. (NYSE:C), CF Industries Holding (NYSE:CF), Comcast (NASDAQ:CMCSA), Coach, Inc. (NYSE:COH), Cisco Systems, Inc. (NASDAQ:CSCO), Dell Inc (NASDAQ:DELL), Ford (NYSE:F), General Dynamics (NYSE:GD), Halliburton Co. (NYSE:HAL), Joy Global Inc. (NYSE:JOY), Marathon Petroleum (NYSE:MPC), Northeast Utilities (NU), Qualcomm, Inc. (NASDAQ:QCOM), Tesoro Corporation (NYSE:TSO), U.S.Bancorp (NYSE:USB) and VMware Inc. (NYSE:VMW). (Fortune used 10 of the 15 Star Investor stock selections for their portfolio so these are not included as multiple picks.)

However, consensus among different stock pickers doesn't provide any clear improvement in performance. The chart below shows the performance of 2012 stocks that were selected by multiple pickers.

Click to enlarge

As with the complete list of 2012 stock selections, there are as many stocks beating the market as underperforming the market.

We decided to run all 142 stock selections though the AAII (American Association of Individual Investors) Stock Investor Professional software database and selected 11 stocks prioritized from the AAII screens that had the highest annual returns over the past 3 years as follows:

1. Stock Market Winners Screen (3 Year - 46% annual return)

This is a growth and value with pricing momentum screen and the only company passing was:

John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS)

Passing criteria for this screen are:

  • The price-to-book ratio is less than or equal to 1.5
  • Earnings per share from continuing operations for each of the last two fiscal quarters (Q1 and Q2) are greater than the earnings per share from continuing operations for the same quarter one year prior (Q5 and Q6)
  • Same-quarter growth in earnings per share from continuing operations from Q5 to Q1 is greater than the same-quarter growth in earnings per share from continuing operations from Q6 to Q2
  • The five-year growth rate in earnings per share from continuing operations is greater than zero
  • The weighted relative strength for the last four quarters is higher than 70% of the entire database (Percent rank greater than or equal to 70)
  • The pretax profit margin for the last 12 months is positive
  • The current stock price is within 15% of the highest price at which the stock has traded over the last two years
  • The average number of shares outstanding for the last fiscal quarter (Q1) is no greater than 20 million

2. Estimated Earning Up Screen (3 Year - 24.8% annual return)

This screen is based on upwards earnings estimate revisions. Six companies passed this screen:

Apollo Global Management LLC (NYSE:APO)

BlackRock, Inc. (NYSE:BLK)

Coach, Inc.

Moody's Corporation (NYSE:MCO)

Novartis AG (ADR) (NYSE:NVS)

Teradyne, Inc. (NYSE:TER)

Passing criteria for this screen are:

  • There are more than four analysts providing earnings estimates for the current fiscal year (Y0)
  • The latest earnings per share estimate for the current fiscal year (Y0) is greater than it was one month ago
  • The latest earnings per share estimate for the next fiscal year (Y1) is greater than it was one month ago
  • There has been at least one upward revision in the earnings estimate for the current fiscal year (Y0) over the last month
  • There have been no downward revisions in the earnings estimate for the current fiscal year (Y0) over the last month
  • There has been at least one upward revision in the earnings estimate for the next fiscal year (Y1) over the last month
  • There have been no downward revisions in the earnings estimate for the next fiscal year (Y1) over the last month
  • The top 30 companies are those that have had the 30 largest percentage increases in the current-year consensus EPS estimate over the last month
  • Alternate-up 5%: Earnings estimates have been revised upward by 5% or more

3. Dreman with estimate revisions (3 year - 21.8% annual return)

This screen looks for contrarian stocks with upward earnings revisions. Only one company passed this screen which also passed screen #2 above:

Teradyne, Inc.

Passing criteria for this screen are:

  • For those companies listed on the New York Stock Exchange, those whose market capitalization for the current quarter (Q1) is in the top 30% of the entire database (Percent Rank is greater than or equal to 70)
  • For those companies listed on the Amex or Nasdaq (National and Smallcap) and the over the counter (OTC) market, those whose market capitalization for the current quarter (Q1) is in the top 15% of the entire database (Percent Rank is greater than or equal to 85)
  • The total liabilities to total assets ratio for the last fiscal quarter (Q1) is less than or equal to the industry's median total liabilities to total assets ratio for the same period
  • The price-earnings ratio is in the bottom 40% of the entire database (Percent Rank less than or equal to 40)
  • There are at least four analysts providing earnings estimates for the current fiscal year (Y0)
  • The current earnings estimate for the current fiscal year (Y0) is greater than it was one month ago
  • The current earnings estimate for the next fiscal year (Y1) is greater than it was one month ago
  • At least one analyst has increased their earnings estimate for the current fiscal year (Y0)
  • At least one analyst has increased their earnings estimate for the next fiscal year (Y1)
  • There have been no downward revisions in the earnings estimates for the current fiscal year (Y0)
  • There have been no downward revisions in the earnings estimates for the next fiscal year (Y1)

4. O'Shaughnessy: Tiny Titans Screen (3 year - 20.4%)

This screen looks for cheap stocks on the mend. Only one company passed this screen which also passed screen #1 above and was:

John B. Sanfilippo & Son, Inc

The passing criteria for this screen are:

  • Companies not based in the United States are excluded
  • Companies that trade on the over-the-counter market are excluded
  • Market capitalization for the latest fiscal quarter (Q1) is greater than or equal to $25 million and is less than or equal to $250 million
  • The price-to-sales ratio is less than one
  • The final results are the 25 companies with the highest relative price strength over the last 52 weeks

5. Templeton Screen (3 year - 19.2%)

This screen looks for favorable margins, consistent earnings growth, and price-earnings ratios below historic norms. Only one company passed this screen which was:

Apple Inc.

The passing criteria for this screen are:

  • The price-earnings ratio is less than the average price-earnings ratio for the last five years
  • The average price-earnings ratio for each of the last five fiscal years is less than 75
  • The growth rate in earnings per share for the last 12 months is positive
  • The growth rate in earnings per share for the last five years months is positive
  • The estimated long-term growth rate in earnings per share is positive
  • The estimated long-term growth rate in earnings per share is greater than the industry's median estimated long-term growth rate in earnings per share
  • Earnings per share for the last twelve months is greater than or equal to earnings per share for the last fiscal year (Y1)
  • Year-to-year earnings per share have increased over each of the last five fiscal years (Y5 to Y4, Y4 to Y3, etc)
  • The operating margin for the last 12 months is positive
  • The operating margin for the last fiscal year (Y1) is positive
  • The operating margin for the last 12 months is greater than or equal to the industry's median operating margin for the same period
  • The operating margin for the last fiscal year (Y1) is greater than or equal to the industry's median operating margin for the same period
  • The ratio of total liabilities to total assets for the last fiscal quarter (Q1) is less than the industry's median ratio of total liabilities to total assets for the same period

6. IBD Stable 70 (3 year - 17.4% annual return)

This screen looks for companies with strong and stable long-term earnings growth. Only one company passed this screen which was:

Apple Inc.

The passing criteria for this screen are:

  • Earnings per share from continuing operations for the last four fiscal quarters (12m) is greater than or equal to earnings per share from continuing operations for the last fiscal year (Y1)
  • Earnings per share from continuing operations has increased by at least 10% over each of the last five fiscal years (Y6 to Y5, Y5 to Y4, Y4 to Y3, Y3 to Y2, Y2 to Y1)
  • The growth rate in earnings per share from continuing operations between the last fiscal quarter (Q1) and the same quarter one year ago (Q5) is at least 10%
  • The growth rate in revenue between the last fiscal quarter (Q1) and the same quarter one year ago (Q5) is at least 10%
  • The R-squared value for earnings per share from continuing operations for the last seven years is at least 80%
  • The price per share is at least $12
  • The company's shares do not trade as American depositary receipts (ADRs)
  • The stock trades on either the American, New York, or NASDAQ exchanges (does not trade over the counter)

7. John Neff Screen (3 year - 17% annual return)

This screen approach uses a stringent contrarian viewpoint - finding undervalued, out-of-favor stocks in the bargain basement that have an optimistic future. Only one company passed this screen which was:

AFLAC Incorporated (NYSE:AFL)

The passing criteria for this screen are:

  • The ratio of the current price-earnings ratio to the sum of the estimated growth in earnings per share and dividend yield (Dividend-adjusted PEG ratio) is less than or equal to half of the median value for the entire database
  • The estimated growth rate in earnings per share is greater than or equal to 7% and less than or equal to 20%
  • The five-year growth rate in sales is greater than or equal to 7% and less than or equal to 20%
  • Free cash flow per share over the last 12 months and the last fiscal year (Y1) is positive
  • The operating margin over the last 12 months is greater than or equal to the industry's median operating margin over the same period
  • The operating margin over the last fiscal year (Y1) is greater than or equal to the industry's median operating margin for the same period

8. Buffettology: EPS Growth (3 year - 15.3% annual return)

A Buffett approach screen seeking consumer monopolies selling at a reasonable price. Four of the companies passed this screen:

Apple Inc.

Coach, Inc.

Cummins Inc. (NYSE:CMI)

Western Digital Corp. (NASDAQ:WDC)

The passing criteria for this screen are:

  • The current operating margin is greater than or equal to the industry's current median operating margin
  • The current net profit margin is greater than or equal to the industry's current median net profit margin
  • The total liabilities to total assets ratio for the last fiscal quarter (Q1) is less than or equal to the industry's median total liabilities to total assets ratio for the same period
  • The seven-year growth rate in earnings per share from continuing operations ranks in the top 75% of the entire database (percent rank greater than or equal to 75)
  • The three-year growth rate in earnings per share from continuing operations is greater than or equal to the seven-year growth rate in earnings per share from continuing operations
  • The earnings per share from continuing operations for the last 12 months and for each of the last seven fiscal years is positive
  • The current return on equity is greater than 12%
  • The seven-year average return on equity is greater than 12%
  • The projected 10-year rate of return (calculated using the current price and the projected price in ten years based on historical earnings growth, projected earnings per share, and historical average price-earnings ratio) is greater than or equal to 15%

Remember that the AAII portfolio annual returns are based on the stocks being adjusted every month, which means that most stocks are typically not held for a one year period but this gives a good starting point at this point in time. We'll see how the performance of this portfolio compares to the expert's portfolios.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.