First off, let’s get this over with … Saul, I know you think searching for rockets is off-topic,
or maybe (evidently?) it’s only when I’m the one searching. So be it. Let’s grow up, okay?
I’ve immersed myself in stock data lately. I’ve looked at hundreds of companies from the
viewpoint of an endless number of price charts and thousands of data points sorted and linked in
ways I’ve never seen before. I’ve sorted them in just about every way that I can think of. Besides
the fact that it’s not the most exciting project I’ve ever undertaken, I learned a few things and
thought I’d share some of the less obvious lessons.
There are factors which can greatly increase the odds of success or failure for a company of
course. Ask Benjamin Graham. On the other side there is no one, two or three factors that I’ve
found which can foretell an investment’s outcome. Ask Tom Gardner. I love Tom, but he can’t
pick a stock to save his butt. Just kidding, Tom. Kinda. There is no holy grail.
In searching for Super Gains, when it comes to price (or companies, actually) it’s okay to
think small. I (mis)used one of my pre-screens by taking every company in my database (8000+)
and list their monthly closing prices and sort them looking for mid- and long-term “super-gains”
different time periods. It amazed me how many companies gain thousands of percent in a year and it
still blows me away at how many gain hundreds of percent. One thing that I’ve kind of known, but has
really become clear to me is that once a company reaches certain plateaus (I didn’t calculate them, but
say, $50, $100, $250 and $1000 just for illustration purposes) the harder and less likely it is
for them to have Super Gains. Yes, it’s a function of mathematics, in that a penny stock can gain
100% much easier than a $100,000 Berkshire stock, but there are other factors there as well. For
example, when a company’s stock reaches $100, we might think twice about ordering a hundred
shares without some serious due diligence (lol, or maybe not) but a $10 stock? 100 shares isn’t
such a big deal, and we might be a little more willing to take somewhat of a gamble on a good
looking company, with perhaps less intensive study. It’s partly a time value thing. How much time
can one spend to invest $1,000.00? It’s not enough to change your life if you lose it all (nor if you
double your investment!) but it’s not an amount that you’d likely tip your paper delivery person at
Christmas either. When it comes to Super Gains, Smaller is easier.
Most Super Gains are stealthy. You likely never heard of them. Part of the reason is the
paragraph above; small prices don’t attract attention and they certainly don’t attract media and
talking heads. Another reason is they aren’t all pretty. In fact, they’re pretty ugly when you put
them up beside a Snapchat, a Shoppify, or even an overpriced GoPro. They are their poor relations
that nobody talks about. And that brings up a big point. Again, without counting, I’d estimate that
of all the companies that gained thousands of percent last year. 85% --probably more—were turnaround
stories. The slower-moving companies that gained merely hundreds of percent in 12 months were more
mixed, but still a high percentage of them were turnarounds. Every year hundreds of public companies
freefall toward bankruptcy. But the closer they get, the more attention they get from employees, their
bankers, their suppliers and service providers like insurance agents, travel providers, credit card holders,
etc., all of which often leads the company to professional interference. Ugly step-siblings or not, it’s a
beautiful thing to watch a company make a comeback. It’s especially beautiful if you’re holding a few
stubs of ownership. Not all Super Gains are pretty. When you move, you don’t hire movers by their
looks unless their butt crack showing all the time offends you. Mostly you want them motivated.
Ugly companies are motivated.
Speaking of pretty vs ugly, many of the companies in the turnaround stories above were once
brokers’ darlings, hyped to the max and then once upon a stumble they were forgotten. Now that
their price is bouncing from the bottom of the crater, and aiming for the stratosphere it might be a
good time to look again.
Anyway, I found a lot of companies to look at. Of those I’m drooling on, most of them have not been
mentioned here that I know of but I don’t read every post here. I hope the time spent studying will
pay off. I think it will, but who knows? Some are pretty shoddy looking, some are in ugly
industries (that means non-tech to you, ha) but you know me. I don’t buy them for their looks.
Show me the money.
I’ll write about some of them soon when I get more time, and right after I buy them.
My ports are only up 2.7% above the S&P 500 YTD, but a minimum of 46% of my ports (51%
right now) have been in cash, so I’m not disappointed at all. But perhaps you can see why I’ve
spend so much time searching for new rockets.
I learned something else today. I always thought the SEC charged fees based on dollar amount.
I’m used to fees from a few pennies to about $15 ‘cause I’m just a little guy. They hit me for a fee
of 60-some dollars last week when I bought 20-some thousand shares of a little mining stock so I
guess it’s based on the number of shares. Never noticed before. Guess I should have bought a share
of BRK/A at $100 grand and saved some fees*. Huh.
I rated all these companies, purely mechanically (except for charts—they all have good looking
charts. As a reward for reading this far, the top 100 candidates I will study over the next several
days are, in order of best-score-first, as follows:
AXON Axovant Sciences Ltd. TTWO Take-Two Interactive Software, Inc. PAM Pampa Energia S.A. EIG Employers Holdings Inc FORM FormFactor, Inc. ITI Iteris, Inc. ITW Illinois Tool Works Inc. MLP Maui Land & Pineapple Company, Inc. MOCO MOCON, Inc. SMID Smith-Midland Corp. SUBCY Subsea 7 SA SUPN Supernus Pharmaceuticals, Inc. WD Walker & Dunlop, Inc. ABR Arbor Realty Trust ACIA Acacia Communications, Inc. ADBE Adobe Systems Incorporated AEIS Advanced Energy Industries, Inc. AIZ Assurant, Inc. ALGN Align Technology, Inc. AMCX AMC Networks Inc. AMD Advanced Micro Devices, Inc. AMZN [Amazon.com](http://Amazon.com), Inc. ANET Arista Networks, Inc. ARCO Arcos Dorados Holdings Inc. BRKS Brooks Automation, Inc. BWXT BWX Technologies, Inc. CABO Cable One, Inc. CCMP Cabot Microelectronics Corporation CGNX Cognex Corporation CHKP Check Point Software Technologies Ltd. COHR Coherent, Inc. COTV Cotiviti Holdings, Inc. CPRT Copart, Inc. CWST Casella Waste Systems, Inc. EA Electronic Arts Inc. EBSB Meridian Bancorp, Inc. EDU New Oriental Education & Technology Group, Inc. ENTG Entegris, Inc. ETSY Etsy, Inc. EXTR Extreme Networks, Inc. FII Federated Investors, Inc. GDOT Green Dot Corporation GNK Genco Shipping & Trading Limited Warrants Expiring 12/31/2021 HD Home Depot, Inc. (The) HOFT Hooker Furniture Corporation HRC Hill-Rom Holdings Inc HRS Harris Corporation HTHT China Lodging Group, Limited IBP Installed Building Products, Inc. INGN Inogen, Inc IOSP Innospec Inc. IPGP IPG Photonics Corporation IRBT iRobot Corporation ISRG Intuitive Surgical, Inc. IT Gartner, Inc. JOBS 51job, Inc. KLAC KLA-Tencor Corporation KLIC Kulicke and Soffa Industries, Inc. LOGI Logitech International S.A. LOGM LogMein, Inc. LRCX Lam Research Corporation LTRX Lantronix, Inc. LYV Live Nation Entertainment, Inc. MA Mastercard Incorporated MELI MercadoLibre, Inc. MOMO Momo Inc. MTZ MasTec, Inc. MU Micron Technology, Inc. MYRG MYR Group, Inc. NANO Nanometrics Incorporated NFLX Netflix, Inc. NSP Insperity, Inc. NTES NetEase, Inc. NTIP Network-1 Technologies, Inc. NUVA NuVasive, Inc. OLED Universal Display Corporation ORBK Orbotech Ltd. PAYC Paycom Software, Inc. PEGA Pegasystems Inc. PKG Packaging Corporation of America PLXS Plexus Corp. PM Philip Morris International Inc POOL Pool Corporation RTEC Rudolph Technologies, Inc. SANM Sanmina Corporation SGMS Scientific Games Corp SIGI Selective Insurance Group, Inc. SWKS Skyworks Solutions, Inc. TECD Tech Data Corporation TER Teradyne, Inc. TREE LendingTree, Inc. TRUE TrueCar, Inc. TSM Taiwan Semiconductor Manufacturing Company Ltd. ULTA Ulta Salon, Cosmetics & Fragrance, Inc. URI United Rentals, Inc. UTX United Technologies Corporation V Visa Inc. VEEV Veeva Systems Inc. WIX [Wix.com](http://Wix.com) Ltd. WLDN Willdan Group, Inc.
I seldom buy any investment without quite a bit of study so I see no reason to start now. That said,
I’d be surprised if buying each of these blindly didn’t make a formidable portfolio, at least for the
short term. (1 yr or less). I have 471 more companies that perform well on paper and need more
study. BTW, those on this list need more study too! As I said, I’ll try to write about them as I go.
I can also say after this digging and crunching that one of the larger “pretty” stocks that by the
numbers should way outperform is FB. If I had to choose one stock as my only investment for a year
or two, I’d probably bet it all on Facebook.** Beware, I’m talking’ my book.
My largest holdings with very concentrated ports, in order of size, are GLD, SHOP, PLCE, FB and
GOOG. The GLD I consider short term. The rest … well, less temporary. I still watch them closely.
Good luck all,
- but BRK isn’t going to double this year, while my little miner … um … might.
** or SHOP. No, wait, GOOG, bet it all on GOOG! Or PLCE, they rock.