Timely calls on gold miners and robotics stocks, and skeptical takes on ride-hailing apps and fake meat, helped Barron’s writers beat the market in 2019.
Stocks that were the subject of bullish articles returned 14.1%, on average, through the end of the year, against a 12.7% gain for the benchmarks. Our bearish calls returned 0.8%, compared with a 10.5% gain for the benchmarks.
It was the first year since 2016 that our bullish picks outpaced their benchmarks. We have had more success on the bearish side, consistently calling out stocks that prove themselves to be overvalued. It was the fifth consecutive year that stocks we warned investors about trailed their benchmarks.
Last year, of course, was an unusually strong one for stocks in general, with the
producing a total return of 31.5%. But stockpickers who rode the right trends—or loaded up on shares of top Dow stock
(ticker: AAPL)—were able to outpace that number.
Barron’s tracks stocks from their closing price before publication until the end of the year. That performance is compared with the performance of benchmarks, chosen based on the market value of the company: either the S&P 500 or the S&P MidCap 400, or the Russell 2000 for small stocks.
We don’t include all stocks mentioned in Barron’s in the scorecard. If a writer chooses more than three stocks in an article, it doesn’t make it onto the list, and stocks chosen in columns like Tech Trader aren’t included either.
Readers don’t have to wait until the end of the year to see how we are doing. Stock picks made by Barron’s writers are tracked in our Picks & Pans page, and we regularly check in on those picks after publication, writing follow-up reports on stocks that have made significant moves.
If a writer recommends in a follow-up that readers sell a stock that had previously been recommended, or reverses a call on a bearish pick, the price closes at its level at the time of the follow-up.
Technology was the top-performing sector in 2019, but Barron’s top picks were mostly not in tech.
Our top stock in 2019 was
(TER), a semiconductor-equipment company with a fast-growing robotics business. The stock returned 72.9% from the date of publication in February to the end of the year, ahead of the S&P MidCap 400’s return of 9.4% over that period.
Compass Diversified Holdings
(CODI), a small-cap stock whose business model resembles private equity, also had a stellar year, returning 65.8% after we wrote about it in May. Compass thrived as its earnings beat expectations and investors flocked to its dividend yield, now 5.8%.
1 Barron’s said to take profits 3/22/19. 2 Prices in local currency; returns in USD.
Gold miners, which have underperformed the broader market over the past decade, finally had a blockbuster year. Barron’srecommended
(NEM) in January, and both stocks returned more than 40% through the end of the year. It helped that the price of gold was up 19% on the year.
Other picks also outperformed. Building-supplies company
(MAS) rode a rebound in home building to nearly double the benchmark’s return. Masco has been selling off some units.
(TGT) improved its online sales, expanding pickup and delivery options. The company also benefited from the closure of other bricks-and-mortar retailers, allowing it to gain market share.
We even wrote a bullish take on Apple, though we advised investors to sell in a follow-up that might have been a bit too early.
Not all of our bullish picks panned out, of course. While we did warn that it was risky, troubled California utility
(PCG) fell after our July cover story on the stock’s potential rebound as it works through the bankruptcy process. (The stock, however, is already up more than 15% in 2020.)
(FL) likewise fell after a positive piece in April, reporting disappointing sales in May. And Occidental Petroleum (OXY) has yet to rebound following a selloff induced by its decision to buy fellow oil and gas explorer Anadarko Petroleum.
On the bearish side, Barron’swarned investors about some risky stocks before they fell. In the case of
(LYFT), those warnings came before their initial public offerings. We wrote that both companies were too far from profitability to be sound investments, and both subsequently fell.
3 Story ran before IPO; price reflects first day trading close
We urged caution on another IPO,
(BYND), and that initially looked like a bad call as the stock spiked on excitement for meat alternatives. But the company’s promise faded later in the year, and shares ended 2019 down 27% from the date of the story.
(MGPI) lost 27% after we warned in May of a “bourbon bubble,” and questioned whether the company’s valuation was too rich. An earnings report later in the year confirmed the slowdown.
Some stocks mentioned in bearish stories ended up doing well, despite our doubts.
(SAM), for instance, defied the doubters as it rode the popularity of hard seltzers to better-than-expected profits.
Write to Avi Salzman at firstname.lastname@example.org
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