Barron's posts a favorite 10 list every year. The list has a good tracking record.
2011: trailed the benchmark index, falling 7% as the S&P dropped 2%.
2012: gaining 17% against a 12.6% rise in the S&P.
2013: gaining 35.2%, nine percentage points better than the S&P 500.
2014: gaining an average of 18.1%, compared with 15.7% for the Standard & Poor’s 500 index. US Airways, now part of
American Airlines Group(ticker: AAL), and
Intel (INTC) led the pack, returning 133% and 51%, respectively. The worst performer was
Barrick Gold (ABX), which lost 31%.
1 small thing to mention is Barrons changed publish date from first week in December to last week. The performance data may be slightly different.
In the 12/27 issue, Barron's wrote:
Two themes to watch next year are how consumers will respond to low gasoline prices and how investors will fare if the Federal Reserve raises interest rates. But these play only peripheral roles in our picks, because we’re more interested in good stocks than good themes.
Don’t expect stock gains to come easy in 2015. In three years, the S&P 500 has risen from a humble 11.7 times next-four-quarter earnings estimates to an ambitious 16.5 times. Shares look likely to rise in tandem with earnings from here, and the estimate for earnings growth next year stands at 8%, according to FactSet.
If there are any themes to our list, they are hidden strength, overblown fears, and underappreciated growth potential.
I second this observation. I believe 2015 will be a stock picker's market. Active manager will eventually get a chance to keep their job.
Here are the list and brief reasons. General Motors (GM) and Bank of America (BAC) are doing much
better than their decimated 2014 profit statements suggest, and most of this
year's bad news won't repeat in 2015, sending earnings soaring with or without
growth (likely with). David Copperfield once made a jumbo jet disappear, but
Boeing's (BA) magic trick starting next year will be to collect billions more
in free cash than it reports in earnings. Speaking of magic, American Airlines
Group (AAL) shares have doubled in 2014, but the carrier's valuation has
shrunk. American and Micron Technology (MU) aren't getting nearly enough credit
for profound improvements in their industries.
Google (GOOGL) and Royal Caribbean Cruises (RCL), meanwhile,
have more growth potential than investors have priced in. Fluor (FLR) can soar
if oil rebounds—and do just fine if it doesn't. Macy's (M) is an e-commerce
whiz disguised as a 156-year-old department store. Gilead Sciences (GILD) is,
well, complicated. But its shares look cheap relative to even bearish
assumptions.
