What are we looking for?
U.S. stocks that are riding a momentum wave.
Craig McGee, senior consultant at Morningstar Canada, is helping us out again with a look at his firm’s top-performing strategy this year. It consists of looking for firms with strongly rising share prices as well as soaring earnings.
How we did it
Mr. McGee searched for U.S. firms that combine strong price performance over the past three, six and nine months with high revisions to analysts’ consensus earnings estimates over the past one, two and three months.
To be included, companies must show positive growth in earnings and have a flat or positive surprise in their most recent earnings release.
The full Morningstar CPMS Price Momentum strategy uses a portfolio of 40 companies; today, we’ll show the top 20 qualifiers.
More about Morningstar
Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its investment research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers. CPMS data cover more than 95 per cent of the investable North American stock market.
What did we find?
The CPMS Price Momentum strategy has produced a dazzling 30.9 per cent return so far this year, outpacing all the other CPMS models. By comparison, the S&P 500 Total Return index has generated a return of only 14.9 per cent this year.
The strategy’s long-term record is nothing to sneer at either. Since inception on Dec. 31, 1993, its annualized return has been 16.1 per cent versus 8.1 per cent for the index.
Remember, though, that there’s no guarantee that this stellar performance will continue.
Do your own research before buying any of the stocks listed here.
Morningstar CPMS Price Momentum Strategy (Top 20)
|Rank||Company||Symbol||Market Cap ($ Mil)|
|1||CVR Energy Inc.||CVI-N||4,078|
|2||Flagstar Bancorp Inc.||FBC-N||1,045|
|4||Stewart Info Svcs Corp.||STC-N||520|
|5||Brown Shoe Co. Inc.||BWS-N||787|
|7||Computer Sciences Corp.||CSC-N||6,150|
|10||Cooper Tire & Rubber Co.||CTB-N||1,501|
|Rank||Company||Symbol||Market Cap ($ Mil)||EPS Estimate Revision 90d||Price Change 90d||Price Change 180d||Price Change 270d||Earnings Momentum|
|1||CVR Energy Inc.||CVI-N||4,078||40.2%||27.6%||92.8%||73.4%||A+|
|2||Flagstar Bancorp Inc.||FBC-N||1,045||252.5%||91.1%||152.8%||87.3%||A+|
|4||Stewart Info Svcs Corp.||STC-N||520||93.7%||31.1%||81.6%||93.8%||A+|
|5||Brown Shoe Co. Inc.||BWS-N||787||8.3%||16.9%||53.0%||95.7%||B+|
|7||Computer Sciences Corp.||CSC-N||6,150||21.7%||14.2%||60.3%||25.7%||B-|
|10||Cooper Tire & Rubber Co.||CTB-N||1,501||8.6%||3.0%||46.4%||45.8%||A+|
|11||Stage Stores Inc.||SSI-N||765||10.1%||9.9%||39.1%||47.1%||B-|
|15||Eagle Materials Inc.||EXP-N||2,531||29.3%||19.2%||73.3%||58.7%||A+|
|16||Green Mountain Coffee||GMCR-Q||5,986||4.3%||29.7%||103.4%||-22.1%||B+|
|17||First American Financial||FAF-N||2,493||17.0%||11.5%||39.9%||49.8%||A+|
|19||Regeneron Pharma Inc.||REGN-Q||17,260||23.5%||20.1%||57.9%||55.8%||A+|
|20||Georgia Gulf Corp.||GGC-N||1,476||14.0%||6.5%||71.8%||24.7%||A+|