SA Reader Rocket Stocks Turn on the Burner

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Includes: AAPL, ACN, AIQUF, BBBY, CRR, DD, FOSL, JNJ, KMB, LULU, MAT, MCD, NFLX, SYY, TSCO
by: MyPlanIQ

We recently reviewed five rocket stocks recommended by Jonas Elmerraji at Thestreet.com. He searches for companies with short-term gain catalysts and longer-term growth potential and his picks were.

  • Apple (NASDAQ:AAPL)
  • DuPont (NYSE:DD)
  • Accenture (NYSE:ACN)
  • Airgas (ARG)
  • Bed Bath & Beyond (NASDAQ:BBBY)

One SeekingAlpha reader who works in the financial services industry in the Northeast and has a fascination with capital preservation, fixed fractional trading, and trading systems made the following comment:

If a jumbo jet could be classified as a rocket, your five would fly. Rockets blast of with short spurts of real energy. Rocket stocks must have a bundle of market power behind them and exceed analysts dreams. For those I'd choose real growth stocks: Carbo Ceramics (NYSE:CRR); Netflix (NASDAQ:NFLX); Fossil (NASDAQ:FOSL); Tractor Supply (NASDAQ:TSCO); Lululemon (NASDAQ:LULU). Then I'd keep AAPL in reserve as a spare.

Wisdom being derived from the counsel of many, we will enter his portfolio and make a comparison with the Street.com and our other three reference portfolios.

This is a diversified set of companies that should provide an interesting comparison.

1. The Fool's Matt Koppenheffer selection of what he considered five stocks for long term dividend performance. All five have dividend yields well in excess of the S&P's and trade at reasonable valuations.

Company

Dividend Yield

Johnson & Johnson (JNJ) 3.4%
McDonald's (MCD) 3%
Kimberly-Clark (KMB) 4.1%
Sysco (SYY) 3.3%
Mattel (MAT) 3.5%
Click to enlarge

2. ETF dividend portfolio benchmark:

Asset Fund in this portfolio
REAL ESTATE ICF (iShares Cohen & Steers Realty Majors)
CASH CASH
FIXED INCOME TIP (iShares Barclays TIPS Bond)
Emerging Market VWO (Vanguard Emerging Markets Stock ETF)
US EQUITY DVY (iShares Dow Jones Select Dividend Index)
US EQUITY VIG (Vanguard Dividend Appreciation ETF)
INTERNATIONAL EQUITY IDV (iShares Dow Jones Intl Select Div Idx)
High Yield Bond HYG (iShares iBoxx $ High Yield Corporate Bd)
INTERNATIONAL BONDS 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
SA Reader 5 Rocket Stocks 175% 566% 83% 207%
Streets 5 Rocket Stocks to Grab Gains in July 36% 214% 22% 62% 31% 93%
Fools 5 Dividend Payers to Save your Portfolio 24% 235% 14% 68% 14% 69%
Retirement Income ETFs Strategic Asset Allocation Moderate 19% 221% 6% 31% 6% 26%
Retirement Income ETFs Tactical Asset Allocation Moderate 16% 186% 12% 94% 11% 80%
Click to enlarge

Three-Month Chart

[Click all to enlarge] One-Year Chart Three-Year Chart In this comparison, we have been using the dividend payer from the Fool as a well-performing stock portfolio along with the ETF portfolios as baseline comparisons. We can see why the reader said that the Street's rocket was a jumbo and to look for larger growth stocks to provide the additional boost. What is interesting is that for as long as we can track the portfolios, the rocket keeps on going and isn't petering out.

Thanks to the reader for his suggestions and we will keep tracking this to see where it goes.

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