CWS Market Review – January 1, 2021
Posted by Eddy Elfenbein on January 1st, 2021 at 2:07 pm

Happy New Year!

The 2020 trading year has come to a close. This was a very difficult year for many of us. I’ll admit that I’m not sorry to see 2020 go. I’ll get to our performance in 2020 in a bit, but first let’s look at the 2021 Buy List.

The 2021 Buy List

Here are the 25 stocks for the 2021 Buy List. It’s locked and sealed, and I can’t make any changes for 12 months.

For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided among 25 stocks. Below are all 25 positions with the number of shares for each and the closing price for 2020. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.

The five new stocks are Abbott Laboratories (ABT), HEICO (HEI), Miller Industries (MLR), Thermo Fisher Scientific (TMO) and Zoetis (ZTS).

The five sells are Becton, Dickinson (BDX), Eagle Bancorp (EGBN), Globe Life (GL), Hormel Foods (HRL) and RPM International (RPM).

Disney (DIS) is our largest stock, with a market cap of $328 billion. The Buy List is mostly large- and mid-cap stocks. Miller Industries (MLR) is our smallest stock, with a market cap of $434 million. Stepan (SCL) is the next smallest, and it’s six times larger than Miller.

Only AFLAC (AFL) and Fiserv (FISV) have been on the Buy List all 16 years. This is Stryker’s (SYK) 14th year.

Here are brief descriptions (via Hoovers) of our five new stocks:

With activities ranging from filling baby bottles to making generic medications and cardiovascular devices, Abbott Laboratories (ABT) is a diverse healthcare-products manufacturer. Its cardiovascular and neuromodulation segment makes products for cardiac-rhythm management, electrophysiology and other areas of cardiovascular care. Abbott’s diagnostics division makes laboratory testing systems and point-of-care tests. The nutritional-products division makes such well-known brands as Similac infant formula and Ensure supplements. Abbott also sells branded generic medicines (including gastroenterology and women’s-health products) in emerging markets and makes the FreeStyle diabetes-care line. Buy up to $120 per share.

As one of the world’s largest independent providers of aircraft replacement parts, HEICO Corporation (HEI) helps jets get airborne. Its flight-support group makes FAA-approved replacement parts for jet engines that can be substituted for original parts, including airfoils, bearings and fuel pump gears. Flight support also repairs, overhauls and distributes jet engine parts, as well as avionics and instruments for commercial air carriers. HEICO’s second segment, the electronic-technologies group, makes a variety of electronic equipment for the aerospace/defense, electronic, medical and telecommunications industries. The company generates about 65% of its revenue in the US. Buy up to $140.

This body builder wants to pump up your chassis. Miller Industries (MLR) makes bodies for light- and heavy-duty wreckers, along with car carriers and multi-vehicle trailers. It serves as the official recovery team at some of the NASCAR races (including Talladega), as well as the Indy 500 races. Miller makes its recovery and towing vehicles at plants in the US and Europe. Its multi-vehicle transport trailers can carry as many as eight vehicles and loads of up to 75 tons. Miller Industries’ US brand names include Century, Challenger, Champion, Chevron, Eagle, Holmes, Titan and Vulcan. The company’s European brands are Jige (France) and Boniface (UK). Miller and rival Jerr-Dan dominate the US market for wrecker bodies. Buy up to $42.

Thermo Fisher Scientific (TMO) preps the laboratory for research, analysis, discovery or diagnostics. The company makes and distributes analytical instruments, scientific equipment, consumables and other laboratory supplies. Products range from chromatographs and spectrometers to Erlenmeyer flasks, fume hoods and gene sequencers. Moving into other areas, it also offers testing and manufacturing of drugs, including biologicals. Thermo Fisher also provides specialty diagnostic testing products, as well as clinical analytical tools. The company tallies more than 400,000 customers worldwide. Its key markets are pharmaceutical and biotech, diagnostics and health care, academic and government, and industrial and applied research. Nearly half of the company’s sales were generated in the US. Buy up to $490.

Whether you have cats or cattle, Zoetis (ZTS) has medicines to keep them healthy. The company manufactures and sells veterinary products such as parasiticides (to protect against fleas, ticks and worms), anti-infectives, medicated feed additives, vaccines and other pharmaceuticals for companion and farm animals. Zoetis boasts more than 300 product lines sold in more than 100 countries around the world, making it one of the world’s largest animal-health businesses. In addition to medications and vaccines, Zoetis offers diagnostics, genetic tests, biodevices and a range of services. About half of the company’s total revenue is generated from the US. Buy up to $180.

The 2020 Buy List

Now let’s look at how we did last year. For 2020, the S&P 500 gained 16.26% while our Buy List gained 16.79%. However, once we include dividends, then the S&P 500 gained 18.40% while our Buy List gained 17.93%.

So we lost to the overall market by less than 0.5%. In our defense, we managed to keep with the market in a very difficult year. We didn’t own any of the tech behemoths that saw tremendous gains in 2020. To give you an example, the S&P 500 Equal Weight index, which weighs every member the same, gained 10.47% in 2020. That means we beat most stocks.

For the long-term, we’ve done quite well. Over the last 15 years, our Buy List has gained 383.05% while the S&P 500 has gained 311.00%.

Our biggest winner in 2020 was Trex (TREX), which gained over 86%. Danaher (DHR) and Ansys (ANSS) were second and third, respectively. AFLAC (AFL) was our worst performer in 2020, which is very unusual for the duck stock.

For people who care about such things, the “beta” of our Buy List in 2020 was 0.9246. The correlation of the daily changes of the Buy List to the changes of the S&P 500 was 96.52%.

The chart below details our Buy List’s performance. I’ve listed each stock, along with the number of shares and the starting and ending prices. For tracking purposes, I assume the Buy List is a $1 million portfolio that starts out equally divided among the 25 stocks.

Trex (TREX) split 2-for-1 on September 15.

Click here to see a detailed table of the dividend-adjusted results. I also have a list of all the stocks that have been on the Buy List over its 16-year history.

That’s all for now. Next week, we get the minutes of the Fed’s last meeting. Also, the big December jobs report will be due out. The next issue of CWS Market Review will be on Friday, January 8. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

My Visit to the Compound
Posted by Eddy Elfenbein on January 1st, 2021 at 12:04 pm

I recently chatted with Josh Brown on his podcast, The Compound Show.

Josh has become a financial media powerhouse, and it’s no secret why. Every time I talk with him, I’m guaranteed to learn something new and to LMAO.

Check it out.

Morning News: January 1, 2021
Posted by Eddy Elfenbein on January 1st, 2021 at 7:01 am

What Giant Skeletons and Puppy Shortages Told Us About the 2020 Economy

NYSE Starts Process of Delisting Three Chinese Telco Companies

Drugmakers to Hike Prices For 2021 As Pandemic, Political Pressure Put Revenues At Risk

Brexit Customs Checks Make a Quiet Debut at U.K. Ports

A Monster Wind Turbine Is Upending an Industry

Once a Fringe Idea, the $15 Minimum Wage Is Making Big Gains

Millions of Americans Are Calling In Sick, Stunting the Recovery

Microsoft Hacked in Russia-Linked SolarWinds Cyberattack

Ford and Indian Auto Maker Mahindra Call Off Joint Venture

Nissan Motor to Reduce Presence in Europe as Part of Turnaround Plan

The Bloomberg 50: The People Who Changed Global Business in 2020

The Bankrupt Companies of 2020

Joshua Brown: Happy New Year, Don’t Die & Ithaka

Howard Lindzon: Goodbye 2020…Hello Bitcoin?

Ben Carlson: Golden Age Thinking

Be sure to follow me on Twitter.

The 2021 Buy List
Posted by Eddy Elfenbein on December 31st, 2020 at 11:14 pm

Here are the 25 stocks for the 2021 Buy List. It’s locked and sealed, and I can’t make any changes for 12 months.

For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided among 25 stocks. Below are all 25 positions with the number of shares for each and the closing price for 2020. Whenever I discuss how the Buy List is doing, the list below is what I’m referring to.

The five new stocks are Abbott Laboratories (ABT), HEICO (HEI), Miller Industries (MLR), Thermo Fisher Scientific (TMO) and Zoetis (ZTS).

The five sells are Becton, Dickinson (BDX), Eagle Bancorp (EGBN), Globe Life (GL), Hormel Foods (HRL) and RPM International (RPM).

Disney (DIS) is our largest stock, with a market cap of $328 billion. The Buy List is mostly large- and mid-cap stocks. Miller Industries (MLR) is our smallest stock with a market cap of $434 million. Stepan (SCL) is the next smallest and it’s six times larger than Miller.

Only AFLAC (AFL) and Fiserv (FISV) have been on the Buy List all 16 years. This is Stryker’s (SYK) 14th year.

Here’s a brief description (via Hoovers) of our five new stocks:

With activities ranging from filling baby bottles to making generic medications and cardiovascular devices, Abbott Laboratories (ABT) is a diverse health care products manufacturer. Its cardiovascular and neuromodulation segment makes products for cardiac rhythm management, electrophysiology, and other areas of cardiovascular care. Abbott’s diagnostics division makes laboratory testing systems and point-of-care tests. The nutritional products division makes such well-known brands as Similac infant formula and Ensure supplements. Abbott also sells branded generic medicines (including gastroenterology and women’s health products) in emerging markets and makes the FreeStyle diabetes care line.

As one of the world’s largest independent providers of aircraft replacement parts, HEICO Corporation (HEI) helps jets get airborne. Its Flight Support Group makes FAA-approved replacement parts for jet engines that can be substituted for original parts, including airfoils, bearings, and fuel pump gears. Flight Support also repairs, overhauls, and distributes jet engine parts as well as avionics and instruments for commercial air carriers. HEICO’s second segment, Electronic Technologies Group, makes a variety of electronic equipment for the aerospace/defense, electronic, medical, and telecommunications industries. The company generates about 65% of revenue in the US.

This body builder wants to pump up your chassis. Miller Industries (MLR) makes bodies for light- and heavy-duty wreckers, along with car carriers and multi-vehicle trailers. It serves as the official recovery team at some of the NASCAR races (including Talladega), as well as the Indy 500 races. Miller makes its recovery and towing vehicles at plants in the US and Europe. Its multi-vehicle transport trailers can carry as many as eight vehicles and loads up to 75 tons. Miller Industries’ US brand names include Century, Challenger, Champion, Chevron, Eagle, Holmes, Titan, and Vulcan. The company’s European brands are Jige (France) and Boniface (UK). Miller and rival Jerr-Dan dominate the US market for wrecker bodies.

Thermo Fisher Scientific (TMO) preps the laboratory for research, analysis, discovery, or diagnostics. The company makes and distributes analytical instruments, scientific equipment, consumables, and other laboratory supplies. Products range from chromatographs and spectrometers to Erlenmeyer flasks and fume hoods to gene-sequencers. Moving into other areas, it offers testing and manufacturing of drugs, including biologicals. Thermo Fisher also provides specialty diagnostic testing products, as well as clinical analytical tools. The company tallies more than 400,000 customers worldwide. Its key markets are pharmaceutical and biotech, diagnostics and health care, academic and government, and industrial and applied research. Nearly half of the company’s sales were generated in the US.

Whether you have cats or cattle, Zoetis (ZTS) has medicines to keep them healthy. The company manufactures and sells veterinary products such as parasiticides (to protect against fleas, ticks, and worms), anti-infectives, medicated feed additives, vaccines, and other pharmaceuticals for companion and farm animals. Zoetis boasts more than 300 product lines sold in more than 100 countries around the world, making it one of the world’s largest animal health businesses. In addition to medications and vaccines, Zoetis offers diagnostics, genetic tests, biodevices, and a range of services. About half of the company’s total revenue is generated from the US.

The 2020 Buy List
Posted by Eddy Elfenbein on December 31st, 2020 at 10:17 pm

The 2020 trading year is on the books! What a difficult year this was for everyone. I’ll admit that I’m not sad to leave 2020 behind.

Let’s look at our performance. For 2020, the S&P 500 gained 16.26% while our Buy List gained 16.79%. However, once we include dividends, then the S&P 500 gained 18.40% while our Buy List gained 17.93%.

So we lost to the overall market by less than 0.5%. In our defense, we managed to keep with the market in a very difficult year. We didn’t own any of the tech behemoths that saw tremendous gains in 2020. To give you an example, the S&P 500 Equal Weight index, which weighs every member the same, gained 10.47% in 2020. That means we beat most stocks.

For the long-term, we’ve done quite well. Over the last 15 years, our Buy List has gained 383.05% while the S&P 500 has gained 311.00%.

Our biggest winner in 2020 was Trex (TREX) which gained over 86%. Danaher (DHR) and Ansys (ANSS) were second and third, respectively. AFLAC (AFL) was our worst performer in 2020, which is very unusual for the duck stock.

For people who care about such things, the “beta” of our Buy List in 2020 was 0.9246. The correlation of the daily changes of the Buy List to the changes of the S&P 500 was 96.52%.

The chart below details our Buy List’s performance. I’ve listed each stock along with the number of shares and the starting and ending prices. For tracking purposes, I assume the Buy List is a $1 million portfolio that starts out equally divided among the 25 stocks.

Trex (TREX) split 2-for-1 on September 15.

Here’s how the Buy List performed throughout the year:

Here’s the data behind the dividend-adjusted returns. I’ve listed each stock’s beginning price, ending price and dividend-adjusted starting price.

Every Buy List Stock
Posted by Eddy Elfenbein on December 31st, 2020 at 10:01 am

Here are all 94 Buy List stocks and when they made the cut.

AFLAC and Fiserv are the only two left that have been on every year. Stryker is on for the 14th year in a row.

Morning News: December 31, 2020
Posted by Eddy Elfenbein on December 31st, 2020 at 7:09 am

COVID-19 Shook, Rattled and Rolled the Global Economy in 2020

China and E.U. Leaders Strike Investment Deal, but Political Hurdles Await

Chinese Tech Stocks Are in Hot Water. It May Not Last.

Fewer Companies Caught the Deal Bug in the Year of the Pandemic

Emergency Cash Calls, Tech IPO Frenzy Push 2020 Banker Fees to Record High

Wall Street Revives Dream of a Bitcoin ETF With New SEC Filing

Stimulus Money Should Have Gone to the Jobless, Economists Say

Homebuyers in U.S. Face Worst Affordability Squeeze in 12 Years

German Automakers Are Charged Up and Ready to Take on Tesla

Tesla Short Sellers Lost $38 Billion in 2020 as Stock Surged

Amazon Buys Wondery as Podcasting Race Continues

FAFSA’s Expected Family Contribution Is Going Away. Good Riddance.

The 2020 Good Tech Awards

Ben Carlson: Animal Spirits: Everyone Knows Everything

Joshua Brown: Talk Less, Listen More

Be sure to follow me on Twitter.

S&P 500 = 3,737
Posted by Eddy Elfenbein on December 30th, 2020 at 2:10 pm

It’s the second-to-last trading day of 2020. We had more vaccine news this morning. The U.K. government authorized the AstraZeneca vaccine.

The S&P 500 is up in record territory. The cyclicals are strong today and small-caps are doing especially well.

The National Association of Realtors reported this morning that pending home sales fell by 2.6% last month. Still, year-over-year contract signings are up 16.4%.

Tomorrow is the final day of trading in a tumultuous year. This year, we had the second, fifth and 13th worst daily percentage loss in the history of the DJIA. We also had the fourth, 11th and 19th best gains. This all happened in a three-week period.

Morning News: December 30, 2020
Posted by Eddy Elfenbein on December 30th, 2020 at 7:05 am

Japanese Stocks Are Soaring. What’s Behind the Surge.

Drive for $2,000 Checks Bogs Down in Senate Despite Trump Push

IPOs Paid Out Big for U.S. Investors in 2020

Bitcoin Jumps to Record $28,600 As 2020 Rally Reaches New Heights

NFL’s Russell Okung to Get 50% of His $13 Million Salary in Bitcoin

Human-Run Hedge Funds Trounce Quants in Covid Year

10 Ways Covid-19 Has Changed the World Economy Forever

What 2020 Was Like for People in the Retail Industry

Surprise Ending for Publishers: In 2020, Business Was Good

China Eyes Shrinking Jack Ma’s Business Empire

Jack Ma Has Lost $11 Billion in Two Months on China Scrutiny

Nick Maggiulli: Should You Buy An All-time High?

Ben Carlson: 9 Questions I Have For 2021

Michael Batnick: Posts of the Year

Howard Lindzon: More 2021 Predictions ….Is SnowFlake Overvalued?

Joshua Brown: How to Avoid Bear Markets

Be sure to follow me on Twitter.

The Battle for $2,000 Checks
Posted by Eddy Elfenbein on December 29th, 2020 at 11:20 am

Here’s the S&P 500 lately: Four straight downs, three straight ups, three straight downs, four straight ups. At least, we’re on pace for our fourth-straight up day which would be another all-time high close for the S&P 500.

The Buy List and the S&P 500 are neck and neck this year. I’ll have all the details this Friday, on New Year’s Day. It looks like it may come down to the final trading day.

There’s not much economic news this morning. The Case-Shiller report said that home prices rose by 8.4% over the last year. The House of Representatives voted for $2,000 stimulus checks, in apparent agreement with President Trump. Now it’s up to the Senate to see what happens.

When asked whether the $600 payments were still on course to go out starting this week as Treasury Secretary Steven Mnuchin previously said, a senior Treasury official said the department expects to make the payments on the same timeline he discussed. If Congress does approve the $2,000 checks, the department will then add to the already issued money.

In a statement explaining his decision to sign the legislation Sunday, Trump noted that the House and potentially the Senate could move to approve larger cash deposits. However, most Republicans in the GOP-held Senate have opposed even a $1,200 check.

Trump’s gambit caps a chaotic eight months of efforts in Washington to send another round of coronavirus relief. Americans waited months for more help after financial lifelines that aided them through the early months of the pandemic expired over the summer. Trump’s delays in signing the year-end bill may cost millions of jobless Americans a week of unemployment benefits after two key relief programs briefly expired.

Update: As I was writing this, the S&P 500 turned negative.