Merry Christmas!
It’s almost 2013! And this week I continue my end-of-year Investment of the Week wrap up. Today, I’m looking at trends.
At the beginning of 2012, I tried to make some predictions about what investing trends would arise over the next 12 months. (You can read the original article here.) I said I thought a lot of the year’s winners would come from sectors experiencing “resurgences, revivals and rebirths.” In particular, I pinpointed the housing sector (still depressed from the sub-prime mortgage crisis, et al.) and emerging markets (a 2011 laggard).
So, how did I do?
Well, the housing prediction was spot-on. Our second-best performing Top Pick for 2012 was a homebuilder, Lennar Corp. (LEN), chosen by Cabot Market Letter Editor Michael Cintolo. (His pick was part of the reason I said housing would be a big sector this year.) Other homebuilders recommended in the Investment Digest also did great, including Toll Brothers (TOL), which is up 35% since Ian Wyatt recommended it in April.
In the broader market, many of the housing-related winners came from the mortgage side of things. Ellie Mae (ELLI), a maker of mortgage software, is the #1 gainer in the NYSE year-to-date. (In July, ELLI was recommended in the Investment Digest by Elliott Gue.)
In fact, I think the wild success of niche financial services stocks like Ellie Mae deserves its own story this year. Yes, part of the credit goes to the simple fact that the mortgage industry is no longer taking on water faster than it can bail itself out. But I saw winning financial services stocks that did a lot more than mortgages.
For example, Consumer Portfolio Services (CPSS), a sub-prime auto loan company I wrote about here on September 18, has gained over 500% year-to-date! CPSS was originally recommended in The Oberweis Report, and then in the September 5 Investment Digest.
There were also lots of winners from more conventional areas of the financial sector. Credit-card issuer and payment network operator Discover Financial Services (DFS), recommended by Elliott Gue in the February 15 Investment Digest, is up 60% year-to-date.
BofI Holding (BOFI), an Internet-based bank recommended by Upside Editor Richard J. Moroney in the September 5 Investment Digest, is up 71% year-to-date.
And Texas Capital Bancshares (TCBI) and Eagle Bancorp (EGBN), both recommended in the March 14 Investment Digest, are up 49% and 42% year-to-date, respectively. TCBI came from Richard Segarra at the Ford Equity Research Report and EGBN from Upside.
Financials definitely had a turnaround moment in 2012.
My second prediction, a resurgence from emerging market stocks, didn’t really come to pass. The worries that kept investors away from emerging markets in 2011 persisted into 2012, prime among them a lack of confidence in China’s growth. The fiscal crises in Europe didn’t help either, scaring many investors away from international in general.
However, there are signs that those worries started to clear up this fall and winter. Many analysts are now saying that concerns about China’s growth were overblown, and the iShares FTSE/Xinhua China 25 Index (FXI), a good reflection of sentiment toward Chinese stocks, has had a great few months (up 23% since early September). So I think we may finally see this prediction play out in 2013.
To conclude, while last year I made predictions for 2012, this year I think I’ll do something a little different. Send me your predictions for popular investing themes and hot sectors in 2013. (Crowdsourcing was a hot trend this year, after all.) I’ll see if there’s any consensus on where attention will be focused next year, and maybe publish some of your predictions in a coming Investment of the Week.
I look forward to seeing what you have to say!
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Dick Davis Investment of the Week
P.S. Don’t Forget!
If you subscribe to the Dick Davis Investment Digest by January 2nd, you’re guaranteed to receive our special January issue that contains the 2013 Top Stock Picks (published January 9, 2013) AND our newest Special Report, The Secret 7: Wall Street’s Private Breakout Picks for 2013.
