While two of the three broad market indices fell on hard times in 2015, the top four recommendations in our 2015 Top Picks issue gave subscribers some excellent gains! For the year, the Dow Jones Industrial Average lost -2.24%, the S&P 500 was down -0.73% and the NASDAQ Composite increased by 5.75%. But, as you can see in the chart below, our leading contributors far surpassed those results. Congratulations to all of our contributors for meeting the challenges of last year with some great investing ideas, and a special thanks to Chris Temple of The National Investor for bringing home the gold!
It is always interesting to go back and review contributors’ primary reasons for choosing the Top Pick stocks, and last year, our leading contributors seemed particularly prescient. Here’s what the top four had to say when they recommended their winners:
“I continue to be of a mind that 1) Long-term interest rates will be docile, making rate-sensitive issues such as REITs more attractive; and 2) The combination of meager wage gains and unaffordability will continue, forcing many Americans to rent rather than buy homes. This is a recipe for a strong total return from a small and fast-growing REIT like Preferred Apartment Communities (APTS).”
“Cincinnati Financial (CINF) is a boring Midwestern Insurance Company that writes main-street insurance, mostly in Ohio, Indiana and Kentucky. But, it also has a very fine balance sheet that is well reserved. CINF pays a steady and growing dividend, and it always raises the dividend, and stays out of trouble by avoiding big risk. CINF has a history of being good to shareholders.”
“First Busey Corporation (BUSE) has a rich history going back to 1868, and has been profitable since the heart of the recession in 2009. Insiders own about 19% of the stock, and appear bullish, as they have been adding to their positions. Net income continued its upward trend last quarter to $8.9 million, non-performing loans were down about 53% and the capitalization ratios are strong. The bank is expanding, acquiring regional competitor Herget Financial. Back in the day, the stock traded above $23. Our initial sell target is a much more modest $9.24.” WSBDS’ Editor’s Note: Even with a 3:1 reverse stock split last August, BUSE still managed to gain more than 18%, including its dividend payout.
“Matthews International (MATW) is the largest maker of bronze and granite memorials and the largest maker of mausoleums in the U.S. MATW has a 22% market share for memorials and a 30% market share for mausoleums. No competitor has more than 1%. MATW recently acquired Schawk, a company that will double its EBITDA within two years. For the 4Q ended September 2014, revenues were up 42% sequentially. For the fiscal year 2014, Cash Flow from Operations was $92.4 million, which allowed the company to raise its dividend 18%. The company also re-initiated its stock repurchase program and repurchased over 100,000 shares of common stock in the last two months of the 4Q.”
There you have it—the makings of great stock-picking—including a contributor with a sharp eye on economic events that could benefit certain sectors, and the dedication to choosing companies with attractive qualities, including fundamental strength, fat and rising dividends, healthy insider ownership, rising revenues and earnings, leading market share and a tendency for stock repurchases.
As for 2016, our contributors have done an outstanding job of recommending companies with similar potential, honing their stock-picking skills for a market that is sure to be volatile and challenging. And that’s where expertise and experience shine.
