Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(iStockphoto / Getty Images)
(iStockphoto / Getty Images)

NUMBER CRUNCHER

A sizzling year for U.S. value-growth combo portfolio Add to ...

What are we looking for?

A U.S. take on the balanced investing approach we wrote about last week.

Our goal is to find a strategy that spans both the growth and value camps. Last week, we looked at a list of Canadian stocks that appealed to both approaches; today, we turn our gaze to U.S. stocks in search of a portfolio that can satisfy both bargain hunters and growth aficionados. Value investors like companies that are cheap in terms of their earnings or assets; growth investors prefer businesses that can rapidly expand their revenues and profits.

More Related to this Story

Both strategies can work, but both go through fallow periods. Combining both approaches may produce more consistent returns than following either one alone.

How we did it

Craig McGee, senior consultant at CPMS Morningstar Canada, gave us a look at the CPMS U.S. Double 10 Earnings Value and Earnings Momentum Strategy, a pooled strategy that combines 10 stocks selected by the CPMS U.S. Earnings Value strategy and 10 stocks selected by the CPMS U.S. Earnings Momentum strategy.

The pooled portfolio includes growth stocks with higher earnings growth and upward estimate revisions from analysts, as well as rising share prices. It also features value stocks with reasonable growth attributes and low price-to-earnings (P/E) ratios, both in terms of the past year and what is expected for the year ahead.

In each strategy, there is a maximum of three stocks allowed in any one industry group.

The attached list shows the 20 current holdings in the pooled strategy, sorted in alphabetical order.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its 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 we found

The pooled strategy has enjoyed a sizzling year so far, with a total return of 50.4 per cent. By comparison, the S&P 500 total return index is up 28.9 per cent over the same period. Since Dec. 31, 1993, the model’s annualized return is 18.6 per cent versus 9 per cent for the index.

Remember, though, that strategies that worked in the past aren’t guaranteed to succeed in the future. Do your own research before buying any of the stocks listed here.

 

CPMS U.S. Double 10 Earnings Value and Momentum Strategy

Company Symbol Forward
P/E
P/E
Relative
to
Industry
QEM % 3-month
EPS
Revision
%
CPMS
EPS
Surprise
%
Align Technology Inc ALGN-Q 31.54x 1.43x 12.24% 13.25% 24.07%
Amerco Inc. UHAL-Q 13.39x 0.73x 9.82% 4.98% 1.50%
CA Inc. CA-Q 11.54x 0.54x 8.61% 0.70% 8.53%
Clayton Williams Engy CWEI-Q 37.99x 2.32x 31.06% 12.79% 103.45%
Delta Air Lines Inc. DAL-N 9.22x 0.50x 22.57% 3.28% 2.81%
E*TRADE Financial Corp ETFC-Q 21.83x 1.30x 27.69% 9.33% 1.44%
Facebook, Inc. FB-Q 52.75x 2.47x 76.55% 20.83% 11.84%
Federal Signal Corp FSS-N 20.14x 1.10x 29.04% -3.13% 38.72%
Federal-Mogul Corp. FDML-Q 16.14x 0.90x 16.84% 15.60% 49.08%
Ferro Corporation FOE-N 20.07x 1.18x 85.00% 13.82% 16.00%
Herbalife Ltd. HLF-N 12.27x 0.68x 9.12% -0.44% 23.40%
Humana Inc HUM-N 13.39x 0.61x -1.12% -10.29% -13.61%
Investment Tech Grp ITG-N 19.54x 1.17x 45.83% 5.26% 14.67%
Lincoln National Corp LNC-N 9.61x 0.57x 1.35% 1.92% 7.84%
Methode Electronics Inc MEI-N 19.57x 0.92x 48.66% 3.57% 21.31%
PDL BioPharma PDLI-Q 4.30x 0.20x 2.50% 16.84% -6.49%
Prudential Finl Inc PRU-N 9.81x 0.58x 17.03% 1.67% 31.47%
SM Energy Company SM-N 16.83x 1.03x 64.46% 40.13% 39.42%
Unum Corp UNM-N 9.65x 0.58x 2.55% -0.71% 3.92%
USANA Health Sciences USNA-N 12.54x 0.69x -0.37% -3.33% 4.30%

QEM = Quarterly earnings momentum - % Change in latest 4 quarters EPS vs. 1 quarter ago. Source: Morningstar Canada

Print

Download table as a CSV file

View full table

  • ALGN-Q
  • UHAL-Q
  • CA-Q
  • CWEI-Q
  • DAL-N
  • ETFC-Q
  • FB-Q
  • FSS-N
  • FDML-Q
  • FOE-N
  • HLF-N
  • HUM-N
  • ITG-N
  • LNC-N
  • MEI-N
  • PDLI-Q
  • PRU-N
  • SM-N
  • UNM-N
  • USNA-N
Live Discussion of ALGN on StockTwits
More Discussion on ALGN-Q
Live Discussion of UHAL on StockTwits
More Discussion on UHAL-Q
Live Discussion of CA on StockTwits
More Discussion on CA-Q
Live Discussion of CWEI on StockTwits
More Discussion on CWEI-Q
Live Discussion of DAL on StockTwits
More Discussion on DAL-N
Live Discussion of ETFC on StockTwits
More Discussion on ETFC-Q
Live Discussion of FB on StockTwits
More Discussion on FB-Q
Live Discussion of FSS on StockTwits
More Discussion on FSS-N
Live Discussion of FDML on StockTwits
More Discussion on FDML-Q
Live Discussion of FOE on StockTwits
More Discussion on FOE-N
Live Discussion of HLF on StockTwits
More Discussion on HLF-N
Live Discussion of HUM on StockTwits
More Discussion on HUM-N
Live Discussion of ITG on StockTwits
More Discussion on ITG-N
Live Discussion of LNC on StockTwits
More Discussion on LNC-N
Live Discussion of MEI on StockTwits
More Discussion on MEI-N
Live Discussion of PDLI on StockTwits
More Discussion on PDLI-Q
Live Discussion of PRU on StockTwits
More Discussion on PRU-N
Live Discussion of SM on StockTwits
More Discussion on SM-N
Live Discussion of UNM on StockTwits
More Discussion on UNM-N
Live Discussion of USNA on StockTwits
More Discussion on USNA-N

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories