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.
|Multimedia Games Holding Co. Inc.||76.41%||Skullcandy Inc.||-32.48%|
|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%|