5 Outperformers Over The Last Year

Includes: NUS, PSMT, STX, TNH, VHI
by: The Value Investor

Equity markets have moved higher on the year despite aggressive downward moves during the European Sovereign Debt crisis. The S&P 500 Benchmark index has already returned 7.2% over the last year thanks to a strong rally over the last six months during which the index returned 21.4%

Within this positive sentiment there are individual companies returning even more than the general market.

In this article I will review the outperformers of the last year and judge the potential for future returns.

Winning portfolio

Investors had plenty of choice investing in companies with at least $1 billion market capitalization which drastically outperformed the S&P 500.

The absolute winners of the last year were Terra Nitrogen Company (TNH), Nu Skin Enterprises (NUS), Valhi (VHI), PriceSmart (PSMT) and Seagate Technology PLC (STX).

Any of these names returned between 87 and 115% over the last year.

Terra Nitrogen Company
Shares in the nitrogen fertilizer producer have returned an astonishing 114% over the last year. The company reported a 41% revenue increase over the last year as the global agricultural boom continues. Over the last three months alone, shares have returned 49% as demand for fertilizing products accelerated over the last months. On top of the price appreciation, shareholders also receive a fat dividend yield of 6.8%

Nu Skin Enterprises
The global direct selling company which develops and distributes anti-aging products saw its shares double over the last year. The company has seen years of steady revenue and profit growth, both of which seemed to have been accelerating in recent years.

Nu Skin had a good news show over the last year. Positive news included a string of upward revisions of its outlook, an increase in dividends and its intention to acquire LifeGen Technologies.

The holding company focused on chemicals, components and waste management saw a spectacular move to the upside in the beginning of 2011 but ever since has traded in a $50-$60 trading range. Besides its holdings in the three public companies Kronos Worldwide, NL Industries and CompX International it also partially owns 2 private firms. The rise in the share price remains largely unexplained as there have not been obvious triggers sending shares higher over the year. Furthermore all three of the public names have traded flat or down on the year, which makes the move in holding company Valhi even more mysterious.

The company which operates mostly international shopping warehouse clubs, continued to see its shares rise after the shares have now four-folded in a mere two years. The shares continued to be supported by healthy underlying revenue growth which has accelerated over the last year to 23%. The company expects growth to continue for the future and trades at a mere 1.2 times annual revenue multiple. For shares to continue to appreciate towards the $100 mark the company needs to expand its current net margin of 3.5% as shares are valued at roughly 30 times earnings already. The rate and the success of its expansion plans in Latin America will be key for 2012.

Seagate Technology PLC

The designer and manufacturer of disk drives and enterprise applications has seen a very strong performance on the back of strong earnings, a dividend hike and a massive $1 billion repurchase program. This resulted in a 20% share price jump on the last day of January. Despite the rally, investors still stand to receive a 3.7% dividend yield per year.

One thing is for sure. In the next year, this list will be totally different. Investors should critically asses their portfolio and not get complacent when the overall market guarantees portfolio returns anyway.

An investor who does his research can still find value especially in some small- and mid capitalization firms in an attempt to earn additional returns in this bull market.

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