Recap from October’s Picks
Our Most Attractive Stocks (-1.1%) underperformed the S&P 500 (+1.5%) last month. Most Attractive Large Cap stock Lam Research Corp (LRCX) gained 13%. Most Attractive Small Cap stock National Presto Industries (NPK) was up 9%. Overall, 13 out of the 40 Most Attractive stocks outperformed the S&P 500 in October.
Our Most Dangerous Stocks (-1.9%) outperformed the S&P 500 (+1.5%) as a short portfolio last month. Most Dangerous Large Cap stock Supervalu Inc. (SVU) fell by 25% and Most Dangerous Small Cap Stock Del Taco Restaurants (TACO) fell by 18%. Overall, 25 out of the 40 Most Dangerous stocks outperformed the S&P 500.
The successes of the Most Attractive and Most Dangerous stocks highlight the value of our Robo-Analyst technology, which helps clients fulfill the fiduciary duty of care when making investment recommendations[1].
12 new stocks make our Most Attractive list this month and 13 new stocks fall onto the Most Dangerous list this month. November’s Most Attractive and Most Dangerous stocks were made available to members on November 2, 2017.
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 for November: Childrens Place Inc. (PLCE: $111/share)
Children’s Place (PLCE), a specialty retailer of children’s clothing, is the featured stock from November’s Most Attractive Stocks Model Portfolio.
PLCE’s after-tax profit (NOPAT) has grown 8% compounded annually since 2008, largely through increased profitability. PLCE’s NOPAT margin has improved from 3% in 2008 to 7% over the last twelve months (TTM), per Figure 1. In addition to margin improvement, PLCE’s return on invested capital (ROIC) has improved from 4% in 2008 to 11% TTM. The company also ties long-term executive bonuses to ROIC, which earns it a spot on October’s Exec Comp Aligned with ROIC Model Portfolio.
