20 Stocks For 2015: A Performance Review

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Includes: CCE, CPB, CRWS, F, GIS, INGR, K, KHC, LNCE, MAT, MLR, NUS, PF, PLOW, PM, SGC, SJM, TPR, UN, UVV
by: Todd Feldman

Summary

I review the performance of an article posted at the beginning of the year listing 20 stocks for 2015.

Absolute return of the equal weighted portfolio for the first quarter was slightly over 10%.

I think Mattel is a stock of the 20 stocks that still has a lot of upside return.

I wrote an article at the beginning of the year named, 20 Stocks for 2015. The article argued that given the backdrop of low oil prices and interest rates together, consumer goods stocks with low P/Es and high dividend yields would do well. Many articles online argue that one should long or short specific stocks. However, we never know if they are correct unless the reader calculates the return themselves.

The purpose of this article is to review the first quarter performance of the 20 stocks listed at the beginning of the year. Constant monitoring of chosen investments is an important part of the investment process.

I only calculate the first quarter return and not any risk measures. Typically the betas of consumer goods stocks are less than one. I calculate the equal weighted return of the 20 stocks was 10.16%. The ishares consumer goods ETF earned a 1.77% return, and the S&P 500 earned a 0.43% return for the first quarter.

The bottom variable again is based on behavioral\technical analysis to help us narrow down a smaller portfolio and find the potential big movers. The equal weighted return for the three stocks in which our behavioral model indicated a bottom yielded a 11.33% return for the first quarter. The stock that underperformed in that group was Mattel. The first quarter return was 12.19% if we include all the other stocks that were near a bottom and that did not have a price history to determine a bottom. In other words the portfolio excludes stocks where the behavioral model indicated the stock was without a doubt not at a bottom.

Table 1: 1st quarter return

Ticker

Company Name

Sub Industry

Bottom

1st quarter return

(NYSE:PM)

Philip Morris International Inc.

Cigarettes

Need more price history

-5.85%

(NYSE:UVV)

Universal Corporation

Tobacco Products, Other

Yes

15.00%

(NASDAQ:MAT)

Mattel

Toys

Yes

-24.00%

(NYSE:GIS)

General Mills, Inc.

Processed & Packaged Goods

 

7.00%

(NYSE:UN)

Unilever NV

Personal Products

 

8.70%

(NYSE:MLR)

Miller Industries, Inc.

Auto Parts

 

17.51%

(NYSE:SJM)

J.M. Smucker Company

Processed & Packaged Goods

Near

15.83%

(NASDAQ:KRFT)

Kraft Foods Group, Inc.

Food - Major Diversified

Need more price history

39.00%

(NASDAQ:CRWS)

Crown Crafts, Inc.

Textile - Apparel Clothing

Maybe

6.63%

(NYSE:COH)

Coach, Inc.

Textile - Apparel Footwear

 

12.00%

(NYSE:PLOW)

Douglas Dynamics, Inc.

Auto Parts

Need more price history

8.09%

(NASDAQ:SGC)

Superior Uniform Group, Inc.

Textile - Apparel Clothing

 

27.57%

(NYSE:CPB)

Campbell Soup Company

Processed & Packaged Goods

Near

6.54%

(NYSE:CCE)

Coca-Cola Enterprises, Inc.

Beverages - Soft Drinks

 

1.35%

(NYSE:PF)

Pinnacle Foods, Inc.

Food - Major Diversified

Need more price history

17.64%

(NYSE:K)

Kellogg Company

Processed & Packaged Goods

 

1.54%

(NYSE:INGR)

Ingredion Incorporated

Processed & Packaged Goods

 

-7.70%

(NASDAQ:LNCE)

Snyder's-Lance, Inc.

Processed & Packaged Goods

 

7.21%

(NYSE:F)

Ford Motor Company

Auto Manufacturers - Major

 

6.18%

(NYSE:NUS)

Nu Skin Enterprises, Inc.

Personal Products

Yes

43.00%

         

All: Equal Weighted Return

   

10.16%

Bottom: Yes: Equal Weighted Return

   

11.33%

Bottom: Yes, Near, Maybe, Need More Price History: Equal Weighted

12.19%

IYK: Ishares Consumer Goods ETF

   

1.77%

S&P 500 Return

     

0.43%

Given the outperformance of the portfolio what do I recommend? Research suggests consumers start to increase their spending six months after oil prices settle from a large fall. Oil starting to fall back in August of 2014. Oil prices are volatile but appear to be settling between a range starting in January of 2015. Based on this research we should see consumers start to increase their spending by the summer. This suggests that this kind of portfolio can still be profitable. Of the 20 stocks written about, Mattel, is the only stock that took a large hit. Our behavioral research suggests that when stocks near their bottom they become very volatile and can fall another 20% like Mattel or increase 43% like Nu Skin. The ones that fall 20% present better buying opportunities. Below is a figure of our behavioral model for Mattel. Based on the fact the loss function for Mattel has crossed its threshold three times, I think Mattel has a lot of room to move to the upside. In addition, it take time for a stock to hit its bottom and increase in stock price. Apple is a great example.

Figure 1

Disclosure: The author is long KRFT, MAT, PF, NUS, UVV.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.