We’re about midway through the year and the S&P is barely up 4%. However, at the same time, plenty of stocks have taken off, like AAPL, AMZN and NFLX. I can point out specific stock winners and losers; but that would only accentuate the ability of those particular companies to operate in this environment. What I am more interested in is larger trends. Are there any, thus far?
Foreign stocks have trounced US gains, so there’s that. China is, by far, the best performer–for reasons unbeknownst to anyone. Domestically, we saw a huge bounce back in energy related names. More so, however, were gigantic leaps in General Contractors. These companies are heavily dependent upon the oil and gas industry and were the biggest losers of 2014. The industry is up 33%, ytd, led by ABGB, SERV, CBI and FIX.
Other industry winners include Drugs-Wholesale, Appliances, Publishing-Books, Healthcare Plans and Solar.
The losers are Aluminum, 3-D Printing, Heavy Construction, Airlines and Trucking.
In short, healthcare continues to run higher, unabated, as investors gravitate towards the next takeover or FDA winner. There is big growth in healthcare now, which is insulated from the forex and QE machinations of the investing public. Then there is the oil and gas trade and the unwind of the winners who benefited from cheap crude. I am talking about restaurants, sans SHAK, truckers and gas station plays. All of those stocks are taking a breather, as the energy complex trade lifts higher.
Seasonally, oil always does well during the first half of the year. Perhaps the second half will see crude lower again, which might reignite a sharp rally in the aforementioned companies who’ve recently paused (no homo)?
One thing remains constant, during all of these trend changes: free cash flow.
Inside of Exodus, I run a semi-annually managed portfolio of stocks, just 15 of them, that is about to be updated (once in January and again in June). The tenets of the portfolio, or the mantra if you will, is to find Growth at a Reasonable Price. Hence the acronym GARP you fucking ignoring clam diggers. I look for high growth names with great free cash flow, that aren’t obscenely priced. This portfolio is designed for longer term investors. Year to date, including dividends, it’s up more than 14%–price weighted.
Off to an early dinner and subsequent adventures at my local Whole Foods. FML