Comparing 7 Stocks With Strong Profits to 7 Equity Portfolios and Dividend ETFs

 |  Includes: AVT, CEF, GGAL, KKR, MKSI, STP, VALE
by: MyPlanIQ

We previously reported on the stock selection from Anand Chokkavelu, CFA, who is an editor and writer at The Motley Fool. He said that brilliant ideas can hide, but the truly, magnificently stupid ideas can't. He selected seven great stocks:

  • CMG (Chipotle Mexican Grill, Inc.)

  • MORN (Morningstar, Inc.)

  • BWLD (Buffalo Wild Wings Inc.)

  • RST (Rosetta Stone Inc.)

  • ISRG (Intuitive Surgical Inc)

  • WFM (Whole Foods Markets)

Now Eric Bleeker of the Fool puts in his seven stock selections based on another set of criteria:

He sought out companies that weren't only bargain priced, but also had strong recent earnings and revenue growth and a history of earnings growth rates that smashed market averages.

  • Normalized net income growth of at least 35% in the past year

  • Revenue growth of at least 25% in the past year

  • A normalized P/E of less than 10.

  • A five-year compounded net income growth rate of 15%.

7 stocks passing the test


Quick Description

Normalized Trailing P/E

Central Fund of Canada (NYSEMKT:CEF)

Closed-end commodity fund


Grupo Financiero Galicia S.A. (NASDAQ:GGAL)

Argentinean bank


Suntech (NYSE:STP)

Chinese solar company


KKR Financial (KFN)

Emphasis on investment in corporate debt



Brazilian miner with high exposure to iron ore


MKS Instruments (NASDAQ:MKSI)

Components to the semiconductor equipment industry


Avnet (NYSE:AVT)

Technology distributor


Click to enlarge

Source: Capital IQ, a division of Standard & Poor's.

We entered these funds into our system and then compared it with a balanced portfolio of dividend producing ETFs as well as the other 7 equity portfolios.


Fund in this portfolio


ICF (iShares Cohen & Steers Realty Majors)




TIP (iShares Barclays TIPS Bond)

Emerging Market

VWO (Vanguard Emerging Markets Stock ETF)


DVY (iShares Dow Jones Select Dividend Index)


VIG (Vanguard Dividend Appreciation ETF)


IDV (iShares Dow Jones Intl Select Div Idx)

High Yield Bond

HYG (iShares iBoxx $ High Yield Corporate Bd)


EMB (iShares JPMorgan USD Emerg Markets Bond)

Click to enlarge

Portfolio Performance Comparison

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Retirement Income ETFs Strategic Asset Allocation Moderate 15% 152% 4% 21% 5% 25%
Retirement Income ETFs Tactical Asset Allocation Moderate 12% 123% 10% 82% 11% 80%
7 Great Stocks That Wall Street Is Missing 56% 249%
7 Stocks With Exploding Profits 33% 144% 3% 8% 11% 27%
Click to enlarge

Three Month Chart

click to enlarge

One Year Chart Three Year Chart Five Year Chart

The more detailed analysis gives you charts and other properties of the portfolio.

We noted before that the 7 great stocks that Wall Street is missing don't have enough history to be something that can have wholehearted support. For as long as it has been in existence, it has done well. We will continue to track it through this choppy period to see what happens. The 7 stocks with exploding profits has definitely suffered through the recent downturn and exhibits the unwelcome volatility of many stock portfolios all the while, the long term performance has been good.

The sentiment today is more conservative and neither of these portfolios are ones in which I would invest at the moment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.