Featured Stocks In September’s Most Attractive/Most Dangerous Model Portfolios


Recap from August’s Picks

Our Most Attractive Stocks (-0.3%) underperformed the S&P 500 (+2.5%) last month. The best performing Most Attractive large cap stock gained 8% and the best performing Most Attractive small cap stock was up 20%. Overall, 16 out of the 40 Most Attractive stocks outperformed the S&P 500 in August, and 23 stocks had positive returns.

Our Most Dangerous Stocks (+2.1%) outperformed the S&P 500 (+2.5%) as a short portfolio last month. The best performing Most Dangerous large cap stock fell by 36% and the best performing Most Dangerous small cap stock fell by 25%. Overall, 21 out of the 40 Most Dangerous stocks outperformed the S&P 500 as shorts in August.

The successes of these model portfolios highlight the value of our machine learning and AI Robo-Analyst technology[1], which helps clients fulfill the fiduciary duty of care and make smarter investments[2].

17 new stocks make our Most Attractive list this month and 20 new stocks fall onto the Most Dangerous list this month. September’s Most Attractive and Most Dangerous stocks were made available to members on September 6, 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 for September: PetMed Express (PETS: $34/share)

PetMed Express (PETS), online pet pharmacy, is the featured stock from September’s Most Attractive Stocks Model Portfolio. PETS was a featured Long Idea in June 2018, and remains Very Attractive.

Since 2012, PETS has grown revenue by 2% compounded annually while after-tax profit (NOPAT) has grown by 13% compounded annually, per Figure 1. The company’s NOPAT margin has increased from 7% in 2012 to 12% over the trailing twelve months (TTM) and its return on invested capital (ROIC) has improved from an already impressive 43% in 2012 to 79% TTM.

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