Recap from February’s Picks
Our Most Attractive Stocks (+3.5%) outperformed the S&P 500 (+1.5%) last month. Most Attractive Large Cap stock Micron Technology (MU) gained 24%. Most Attractive Small Cap stock Oclaro (OCLR) was up 11%. Overall, 21 out of the 40 Most Attractive stocks outperformed the S&P 500 in February.
Our Most Dangerous Stocks (+1.9%) underperformed the S&P 500 (+1.5%) as a short portfolio last month. Most Dangerous Large Cap stock Banco Bilbao Vizcaya Argentaria (BBVA) fell by 7% and Most Dangerous Small Cap Stock Seaspan Corp (SSW) fell by 14%. Overall, 18 out of the 40 Most Dangerous stocks outperformed the S&P 500 in February.
The successes of these model portfolios highlight the value of our machine learning and AI Robo-Analyst technology, which helps clients fulfill the fiduciary duty of care and make smarter investments.
31 new stocks make our Most Attractive list this month and 32 new stocks fall onto the Most Dangerous list this month. March’s Most Attractive and Most Dangerous stocks were made available to members on March 7, 2018.
Our Most Attractive stocks have high and rising returns on invested capital (ROIC) and low price to economic book value ratios. Most Dangerous Stocks have misleading earnings and long growth appreciation periods implied by their market valuations.
Most Attractive Stocks Feature: Louisiana Pacific Corporation (LPX: $28/share)
Louisiana Pacific Corporation (LPX), a manufacturer of home construction building products, is the featured stock from March’s Most Attractive Stocks Model Portfolio.
Since 2014, LPX has grown revenue 12% compounded annually while after-tax profit (NOPAT) has increased from -$61 million to $412 million in 2017, per Figure 1. This profit growth can be attributed to LPX’s NOPAT margin rising from -3% in 2014 to 15% in 2017. The company has also improved its ROIC from -2% in 2014 to a top-quintile 19% in 2017. Longer-term, LPX has grown NOPAT by 13% compounded annually since 1998.