Top Stock Picks: 2014 In Review

Buy, hold, sell for 2014 stock picks


If you’re investing in stocks, identifying those that are set to take off is key to outperforming the stock market. Unfortunately, identifying stocks that are about to take off is extremely difficult.

With corporate filings that run in the hundreds of pages, there’s a lot that investors don’t know. In the market, what you don’t know today can hurt you tomorrow.

New Constructs helps you identify items you otherwise wouldn’t have known about. We perform unrivaled diligence on over 3,000 companies, and we make it accessible and cost-effective.

10-Ks contain the most important financial information that companies provide all year. Unlike press releases and 10-Qs, only the 10-Ks contain a complete set of the financial footnotes. And only in these footnotes can you find the full set of data required to assess the true profitability and valuation of stocks.


What do we mean by diligence?

All too often we find significant data hidden in the footnotes that changes the valuation model for a company. Our more complete models help you identify stock picks that are significantly undervalued. See how our diligence also paid in 2013 and 2012.

For instance: On January 15 we encouraged investors to buy Amgen (AMGN). Amgen had grown after-tax profit (NOPAT) by 14% compounded annually over the past decade and had generated free cash flow of at least $3 billion for the last five years. Despite its strong fundamentals, AMGN traded at a discount to current cash flows. The stock is up 40% since our recommendation while the S&P 500 is up only 11%.

Here are a few other examples of stock picks that generated alpha for investors:

  1. Consolidated Edison (ED): We recommended ED in our second quarter overview of the Utilities sector as its valuation did not coincide with its very profitable history. The stock is up 21% since our January 24 article while the S&P 500 has only gained 11%.
  2. Allstate (ALL): We recommended ALL in our second quarter overview of the Financials sector as its 2013 net income was depressed due to a one-time loss on the sale of Lincoln Benefit Life Company. Its NOPAT had actually increased by 18% year over year. Because of this, ALL was trading at a steep discount. The stock is up 25% since our April 10 article while the S&P 500 is only up 9%.
  3. The Chubb Corporation (CB): We recommended CB in highlight of Most Attractive Stocks in April. Chubb Corp had grown NOPAT by 57% in 2013 while increasing its ROIC to 16%. However, the market had priced Chubb for a permanent 30% NOPAT decline. CB is up 16% since our April 9 article while the S&P is only up 10%.
  4. Medtronic Inc. (MDT): We recommended Medtronic in our first quarter review of the Health Care Sector. Medtronic had grown NOPAT by double digits for the past 15 years, had $11 billion in excess cash, and was increasing its return on invested capital (ROIC). At the time, MDT was priced for hardly any growth going forward. The stock is up 24% since our January 22 article while the S&P 500 has only gained 11%.
  5. Intel (INTC): We highlighted Intel as a great stock to buy due to the recovering PC market. While we noted mobile growth was still a worry, Intel was still poised to be a portfolio star this year. Intel was also attractively priced. The stock is up 18% since our July 2 article while the S&P 500 is only up 4%. If you bought Intel when I first wrote on it in November 2013, you would have seen a 50% return.

These are just a few examples of the many examples in which we made clients money in 2014. Our proprietary technology and patented systems allow us to find undervalued companies that have the potential to generate alpha for you.

Disclosure: New Constructs staff receive no compensation to write about any specific stock, sector, or theme.

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Joe Economy 7 years ago Member's comment

Sounds like you had some good recommendations that advanced nicely. Would be useful to see all your stock picks including the ones that declined (if relevant). Also, perhaps for many investors, the tricky part of investing is not just the entry point, but also the exit point - setting clear profit goals. Any thoughts?

Dick Kaplan 7 years ago Member's comment

Impressive, where can I find out more?

David Trainer 7 years ago Author's comment

You can learn more by signing up for our free membership at

Dick Kaplan 7 years ago Member's comment