What do Mike Trout and Microsoft
MSFT
Both are members of a 30-30 Club. In baseball, this club contains those stars who have smashed 30 home runs and stolen 30 bases in the same season.
I have a 30-30 club for corporations. To makes it, a company must have a 30% return on stockholders’ equity (high profitability) and a 30% average earnings growth rate over the past five years. It must also have a market value of $2 billion or more.
This year only 38 corporations made my 30-30 club, down from 47 a year ago. All these companies deserve to be honored, but I recommend only a few of their stocks each year. This year I recommend five.
Merck
MRK
Nucor
NUE
Based in McKinney, Texas, Encore Wire
WIRE
A maker of servers, server-management products and data-storage systems, Super Micro Computer
SMCI
Selling for only five times earnings, Coterra Energy (CTRA) looks like a bargain. Oil prices have come down this year on recession fears, but I feel that the oil-and-gas industry has a good outlook, partly because the drill count has come way down Coterra does exploration in Appalachia, Texas and Oklahoma.
Other Winners
In addition to the five stocks I recommend above, there are 33 other honorees in the club. Among the very largest companies, Microsoft, Coca-Cola
KO
CAT
Other large-cap winners are Albemarle
ALB
BLDR
DECK
JBL
MCHP
Also: Monolithic Power Systems
MPWR
PHM
STLD
Mid-sized companies on the list are Academy Sports and Outdoors (ASO), Affiliated Managers Group
AMG
ABG
BCC
BC
CMC
Also: Group 1 Automotive
GPI
MEDP
MATX
RLI
UFPI
WWE
UFPI
Past Record
I’ve written about the 30-30 Club most years since 1999. My recommendations have averaged a 9.9%% return (including dividends) over twelve months. The Standard & Poor’s 500 Total Return Index has averaged 7.6% over the same periods. My picks have beaten the S&P 500 11 years out of 18, and have shown a profit in 11 years.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
My selections have been profitable ten times out of 17, and have beaten the S&P ten times. A year ago, I recommended six of the 30-30 stocks. Dick’s Sporting Goods (DKS) did best, up 33%, followed by Mueller Industries
MLI
MED
Southern Copper
SCCO
NXST
WSM
Overall, my picks managed a 1.4% gain while the S&P’s return was negative 5.3%.
Disclosure: I own Merck and Matson personally and for most of my clients. I own Encore Wire personally and for some clients. Some clients own Evercore
EVR
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