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We are drilling down on the stock portfolios we have measured to derive a short list of the best of the best. So far, three portfolios have made it through.

Portfolio Performance Comparison
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
P 10 Dividend Stocks From SeekingAlpha Readers 27% 277% 10% 47% 11% 54%
P SmartMoney Magazine Where to Invest 2011 12 Stocks 22% 143% 10% 43% 9% 34%
22 Stocks Good Enough For Buffett And Lynch 22% 125% -5% -15% 12% 37%

We are examining the different ideas for selecting a portfolio and then measuring which ones are best in class and worth watching.

We now move to a series of reasonably priced growth stocks -- or stocks with strong profit growth. This seems like a good place to look as it represents a prudent approach to buying into a company.

First up, Eric Bleeker of the Fool puts in his 7 Stocks With Exploding Profits:

  • Central Fund of Canada (CEF)
  • Grupo Financiero Galicia S.A. (GGAL)
  • Suntech (STP)
  • KKR Financial (KFN)
  • Vale (VALE)
  • MKS Instruments (MKSI)
  • Avnet (AVT)

Next the Forbes/YCharts Growth at a Reasonable Price 2011 Selections:

  • Allegiant Travel Company (ALGT)
  • AmTrust Financial Services, Inc (AFSI)
  • Calavo Growers, Inc. (CVGW)
  • Coca-Cola Company (KO)
  • Tata Motors Ltd Tata Motors (TTM)
  • AmerisourceBergen Corporation (ABC)
  • Becton, Dickinson and Company (BDX)
  • Cal-Maine Foods, Inc. (CALM)
  • Darden Restaurants, Inc. (DRI)
  • Tim Hortons Inc. (THI)

We then covered the The Street's Growth at a Reasonable Price 2011 Selections which were:

  • Apple Inc. (AAPL)
  • Polo Ralph Lauren Corporation (RL)
  • FedEx Corporation (FDX)
  • Buffalo Wild Wings (BWLD)

These are all high quality stocks and there is no overlap between the portfolios. All of these selections are likely to provide stable portfolios for the long term investor. We contrast this with an ETF portfolio that doesn't select individual companies but rather selects asset classes.

Fund in 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

This dividend bearing portfolio has US, international and emerging market equities as well as real estate. Note that while there is a fixed income portion, to make a fairer comparison, we will exclude this asset class although we would recommend at least 20% of the portfolio be dedicated to fixed income assets.

  • The Street's Growth at a Reasonable Price 2011 Selections -- Total of $10K invested equally in each stock
  • YCharts Growth at a Reasonable Price 2011 Selections -- Total of $10K invested equally in each stock
  • 7 Stocks With Exploding Profits -- Total of $10K invested equally in each stock
  • Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
  • Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)

Portfolio Performance Comparison

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
The Streets Growth at a Reasonable Price 2011 Selections 60% 284% 28% 85% 27% 79%
Retirement Income ETFs Tactical Asset Allocation Moderate 14% 155% 12% 93% 11% 79%
7 Stocks With Exploding Profits 43% 201% 8% 21% 12% 32%
Retirement Income ETFs Strategic Asset Allocation Moderate 17% 155% 6% 33% 5% 27%
YCharts Growth at a Reasonable Price 2011 Selections 25% 171% 17% 60%

This list is sorted in descending order of the 5 year Sharpe ratio -- i.e. what has given the best risk adjusted returns over a five year horizon. We appear to have three good selections here. We are going to eliminate the YCharts portfolio based on its lack of history but the Street's Growth at a reasonable price and the 7 Stocks with exploding profits all have decent returns across a five year time horizon.
Three Month Chart
click to enlarge
One Year Chart Three Year Chart Five Year Chart

All three of these portfolios behave well and combining the selections could give reasonable returns along with lower volatility. This definitely seems like a good place to set a filter and look for stock portfolios.

Both The Street's Growth at a Reasonable Price 2011 Selections and 7 Stocks With Exploding Profits go through to the next round.

Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

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

Source: Portfolio Playoffs: Value/Growth Edition - A Winning Combination