by Clement Thibault
The end of one year and beginning of another is always a great time to look back at the passing year's successes and failures. It's also often a time of self-reflection, when one evaluates one's performance in order to perhaps do better in the coming year.
Though we're not financial advisors at Investing.com, nor do we provide investment advice, we do focus on the current market environment with the expectation that readers will always do their due diligence before making their own investment decisions. Having said that, our stock calls are guided by our own investment philosophy; readers should formulate one for themselves as well.
Long-time readers know that my personal philosophy is rather conservative. I believe the best way to get a good return is to begin by not losing money. If you invest $100, only to see your principle lose 50%, you'll need to double your remaining money in order to merely break even.
My analysis is often suited for a longer investment timeframe, at the very least a few months and up to a few years. With all that being said, as the year winds down, I wanted to look at the bottom line to see where we've made good calls, where we lacked enthusiasm and where we missed the mark. Since tens of articles were published under my byline, I can't revisit all of them, so I picked a few notable opinions made on prominent companies over the past year. This post is divided into three sections: Good Calls, Lukewarm Picks, and finally, opinions that Missed the Mark.
What I consider to be my worst pick of the year is also included in conclusion. The S&P 500 YTD performance is 20.1%, and that will be our alpha benchmark.
Good Calls
Best Buy (NYSE:BBY), a consumer electronics corporation, published December 22, 2016.
"We expect Best Buy to continue growing at the market's pace. We see it as a slow but steady performer."
Share price then: $46.56; now: $67.01 +43.9%
Nike (NYSE:NKE), a sports apparel corporation, published January 5, 2017.
"Given its current valuation and the fact that Nike is still a growing company, we expect it to have a much better year in 2017 compared to the one that just passed."
Share price then: $50.83; now: $64.81 +27.5%
Under Armour (NYSE:UA), a sports apparel corporation, published on January 5, 2017.
"We don't believe that now is the time for investors to take a new position in UA. Far better would be to wait and see which direction fundamentals take in 2017."
Share price then: $25.17; now: $14.24 -43.4%
Wal-Mart Stores (NYSE:WMT), a retail corporation, published February 20, 2017.
"We think [Walmart] is worth a second look by income investors, if not everyone else."
Share price then: $69.37; now: $97.90 +41.1%
Advanced Micro Devices (NASDAQ:AMD), a semiconductor company, published July 25, 2017.
"At this point, we wouldn't rush into [AMD] until recent business metrics become clearer. The safer play is to wait for actual sales and market share figures."
Share price then: $14.16; now: $10.98 -22.46%
Macy’s (NYSE:M), a retail corporation, published February 20, 2017.
"At its current share price of $32 and P/E ratio of 15, [Macy's] simply isn't a good enough value."
Share price then: $32.30; now: $25.80 -20.1%
Alphabet (NASDAQ:GOOGL), (NASDAQ:GOOG), the holding company of Google, January 5, 2017 and April 27, 2017.
"We don't expect Alphabet will lag the market for a second year straight."
and
"We can't say it more strongly. Alphabet is one of the best companies doing business today and it should have a place in your portfolio."
Share price then: $771 in early January and $889 at the end of April; now: $1085 +40.7% and +22%
Snap (NYSE:SNAP), parent corporation of Snapchat, published March 1, 2017
"Longer term investors should stay away from Snap right now."
Share price then: $24.00; now: $16.10 -32.9%
Lukewarm Picks
Kraft Heinz (NASDAQ:KHC) versus PepsiCo (NYSE:PEP), two food and beverage conglomerates, published February 14, 2017.
"Our intention with this post wasn't to actually compare two similar companies, head-to-head. Nevertheless, if forced to choose, we prefer PepsiCo's potential growth and current valuation over Kraft Heinz's."
KHC share price then: $90.58; now: $79.37 -12.3%
PEP share price then: $106.52; now: 118.05 +10.8%
First Solar (NASDAQ:FSLR), a solar panel manufacturer, published January 5, 2017.
"From an investment perspective, First Solar will probably be a longer-term ride that may not see much of a pay-out in 2017, but its prospects are still the best within the industry."
Share price then: $32.09; now: $70.63 +120%
Missed the Mark
Netflix (NASDAQ:NFLX), a streaming and entertainment company, published April 16, 2017.
"At its current level, Netflix is already priced for just about its best case scenario. We believe that means now would be a risky time to open a new position. Consequently, we find it impossible to recommend Netflix as a sure pick right now."
Share price then: $142.92; now: $190.42 +33.24%
Microsoft Corporation (NASDAQ:MSFT), a technology company, published July 20, 2017.
"We can't support a P/E ratio of above 30, let alone 32. Given current market conditions, we estimate a fair value at $65 per share for a multiple of 28.5."
Share price then: $73.86; now: $86.38 +16.9%
TJX Companies (NYSE:TJX), a retail corporation, published February 20, 2017.
"It's a well-run company with an already demonstrated track record that still has more growth ahead of it. We see it as one of the most attractive retail sector stocks right now."
Share price then: $77.19; now: $76.06 -1.4%
Conclusion
Overall, I am happy to report that it has been a good year. All of our analysis was sound and most of our analysis provided good, profitable opportunities.
When I was wrong, I mostly missed on stocks that seemed too risky to me for one reason or another. Netflix provides a good example of that; I refused to recommend it because of its valuation—nevertheless, it continued to rise higher and higher. The same thing happened with Microsoft. Though the technology sector was on fire this year, I was reluctant to get fully on board.
My worst call of the year was AT&T (NYSE:T), a telecom company, published in April. I called an acceptable entry point at $40, but the stock dipped to $32 before rebounding to its current price of $38.5. I underestimated acquisition and regulatory risks, and the stock hasn't performed the way I thought it would. That’s on me.
However, our main goal this year was achieved: losses were minimal and a healthy number of our recommendations outperformed the market. We avoided major duds like Under Armour, while recognizing Walmart was back ahead of the pack.
I might have missed a few good stocks by being too conservative, but I'll take a year like this one every year.