Barron's 400 Diary

Green Mountain Coffee Roasters (GMCR) Is the Best Performing Stock In B400 YTD

0 Comments 17 May 2013

Stocks selected for the Barron’s 400 are all in great shape, financially speaking. But that doesn’t mean they all perform “great” in the market.

MarketGrader analyzes a company according to its growth trajectory, whether its stock is relatively cheap or expensive, its profit-margin growth and return on shareholder equity, and how it grows and manages the cash it generates from operations. Only companies with high overall grades (60 or better) see their stocks added to the Barron’s 400.

So, all the components start out looking good. But lots of additional factors figure into how a stock does in the market. Many of them—general economic conditions, investor psychology, etc.—aren’t related to companies’ financial health. Management’s execution of the business strategy also is a variable, even though financial strength suggests managers are on the ball.

The result its that some stocks rise and some fall. Of course, with the Barron’s 400 gaining 16.33% so far this year through May 10, more component stocks have advanced than retreated. Still, the market’s rising tide definitely hasn’t lifted all boats.

Leading the best performers is Green Mountain Coffee Roasters, Inc. (GMCR), which is up almost 87% this year. Better-than-expected earnings and a new line of coffee-brewing machines have helped fuel the surge. However, the stock is still recovering from a 2011-12 slump induced by criticism that Green Mountain’s growth strategy was too dependent on single-cup brewing machines that lost patent protection last autumn.

Cliffs Natural Resources, Inc. (CLF) fell the most, 39%. The iron ore miner has been clobbered by the slow-recovering economy and falling prices for its main product. Recently, though, securities analysts have become more optimistic about Cliffs’ ability to weather this rough patch, and one brokerage firm has lifted its rating on the stock to “outperform.”

As these two examples show, the sands of fortune are always shifting. That’s one reason the Barron’s 400 is reconstituted twice a year with the stocks of companies in the best condition to capitalize on opportunities and withstand setbacks.

Following is a table showing the best and worst individual performing stocks in the Barron’s 400 so far this year, organized by the 10 major sectors. One point worth noting is that while almost all the worst performers posted double-digit percentage declines, one merely gained the least.

Sector Best Change Worst Change
Consumer
Discretionary
Multimedia Games Holding Co. Inc. 76.41% Skullcandy Inc. -32.48%
Consumer
Staples
Green Mountain Coffee Roasters Inc. 86.79% Vitamin Shoppe Inc. -19.77%
Energy Oil States International Inc. 41.15% C&J Energy Services Inc. -13.11%
Financials Assured Guaranty Ltd. 44.48% Cardinal Financial Corp. -11.14%
Health Care Celgene Corp. 62.43% Spectrum Pharmaceuticals Inc. -32.06%
Industrials Spirit Airlines Inc. 64.58% American Railcar Industries Inc. -22.34%
Materials Rockwood Holdings Inc. 36.75% Cliffs Natural Resources Inc. -39.01%
Technology Synchronoss Technologies Inc. 48.94% Rackspace Hosting Inc. -29.47%
Utilities Questar Corp. 28.74% PPL Corp. 7.20%
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John A. Prestbo - who has written 76 posts on MarketGrader.com Blog.

John Prestbo, senior advisor to MarketGrader Capital, was formerly editor and executive director of Dow Jones Indexes. He was also chairman of the Dow Jones Index Oversight Committee. During his time at Dow Jones Indexes he worked, along with Barron's and MarketGrader, on the development of the Barron's 400 Index. Prior to that, Mr. Prestbo worked as an editor and writer for The Wall Street Journal in various capacities, including page-one editor, commodity news editor and markets editor. Mr. Prestbo has co-authored or edited several books over the past 30 years. The most recent was "The Market's Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average," published by Dow Jones Indexes in 1999 and "Barron's Guide to Making Investment Decisions" which he helped to compile and edit in 2006. Mr. Prestbo won the University of Missouri Award for Distinguished Business Writing in 1967 and the George M. Loeb Achievement Award for Business Writing in 1968. In 2007, he won the William F. Sharpe Indexing Lifetime Achievement Award. That same year, he was honored for his leadership by Dow Jones Indexes during its celebration of 10 years as a separate business unit.

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