Hey, welcome back! Things barely moved in January, but here in February there has been quite some shakeup with many names leaving the list and a handful joining.
Let’s first take a look at those leaving, then we’ll explore the new stocks. We’ll cover performance in the middle, and then I’d like to hint at something cool I’ll be working on which you’ll hopefully see more of in March.
Leaving The List
- CORT -> Had a period of high earnings five years ago that means it now fails the consistent earnings point. An example worth exploring (for me) to perhaps improve how this point is calculated.
- FHI -> Now fails the consistent earnings point. FHI’s earnings are quite cyclical. Cash flow has also taken a dip though, so it also would have fallen from the list for that.
- GNTX -> Again, consistent earnings. When looking at a 5yr chart, one can easily see that things are imbalanced here.
- MCFT -> A dip in cash flows. I guess people are buying fewer boats, or MCFT is sitting on a higher amount of assets.
- MSB -> This was a trust that made its way onto the list. It leaves due to the “Consistent Earnings” point.
- POWI -> Earnings yield is no longer higher than the 10Yr treasury.
- UG -> The teeny-tiny company that made the list has had earnings fall off a cliff.
NEW
- EAF -> GrafTech International was founded in 1886, so it’s been through a lot. The company has had a terrible year, and the stock has been beat down to a PE ratio of just 3.6 at the time of writing.
To steal from Wikipedia, the company makes “graphite electrodes and petroleum coke, which are essential for the production of electric arc furnace steel and other metals.” I have not the slightest idea what that means, but this could be a good research play for a deep value investor.
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KLAC -> KLA Corp is a $55B company that operates in the semiconductor industry. The company just announced year-over-year revenue growth of 28%, and net income growth of 36%, so it has been doing something right.
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LRCX -> Another semiconductor play that’s been sat on the edge of making it into the Buffett Score list for the past few months. This $68B firm also announced 20+% growth year-over-year during its recent earnings call. Although, and of note, its net margins did slip a little.
Performance
The re-birth of the Buffett Score in December came with a basket of 32 stocks. Those 32 stocks, if bought on December 1, have returned 2.43% through today. The S&P 500 during the same period has returned 0%, completely flat.
Reddit user /u/Professional_Desk933 also suggested a PEG based portfolio. That portfolio, initiated on December 1, contained 12 stocks. All 12 stocks remained in January, so over the last two months that portfolio has grown 4.49%. Again, versus the 0% in the S&P.
There’s no sense running a victory lap after two months, but I do like the trend we’re seeing here.
I will be updating the portfolios this week with the necessary changes (like “selling” POWI in the PEG portfolio). You can keep an eye on both of the portfolio docs:
What’s Next
I am working on a way to bring data for every stock to users. It will be premium, but I’ll still offer free ways to access the work (like on Reddit, here on BuffettScore.com and via the newsletter). For those that want to go deeper, explore other scores, and explore past Buffett Score runs though, I’ll have you covered soon enough.
Thank you all for the support so far!