Featured Stocks In July’s Most Attractive/Most Dangerous Model Portfolios

Recap from June’s Picks

Our Most Attractive Stocks (-2.9%) underperformed the S&P 500 (-1.9%) last month. Most Attractive Large Cap stock Kellogg Company (K) gained 11%. Most Attractive Small Cap stock Value Line (VALU) was up 18%. Overall, 19 out of the 40 Most Attractive stocks outperformed the S&P 500 in June.

Our Most Dangerous Stocks (-1.1%) underperformed the S&P 500 (-1.9%) as a short portfolio last month. Most Dangerous Large Cap stock Blackberry, Ltd (BB) fell by 23% and Most Dangerous Small Cap Stock Monotype Imaging Holdings (TYPE) fell by 10%. Overall, 19 out of the 40 Most Dangerous stocks outperformed the S&P 500 as shorts in June.

The successes of these model portfolios highlight the value of our machine learning and AI Robo-Analyst technology[1], which helps clients fulfill the fiduciary duty of care and make smarter investments[2].

12 new stocks make our Most Attractive list this month and five new stocks fall onto the Most Dangerous list this month. July’s Most Attractive and Most Dangerous stocks were made available to members on July 3, 2018.

Our Most Attractive stocks have high and rising returns on invested capital (ROIC) and low price to economic book value ratios. Most Dangerous stocks have misleading earnings and long growth appreciation periods implied by their market valuations.

Most Attractive Stocks Feature for July: MKS Instruments (MKSI: $97/share)

MKS Instruments (MKSI), a provider of technical instruments that measure, control, power, deliver, monitor, and analyze manufacturing processes, is the featured stock from July’s Most Attractive Stocks Model Portfolio.

Since 2013, MKSI has grown after-tax profit (NOPAT) by 59% compounded annually, from $53 million in 2013 to $340 million in 2017. MKSI has continued to grow profits in 2018, and it’s NOPAT is $377 million over the trailing twelve months (TTM). The company’s NOPAT margin has risen from 8% in 2013 to 19% TTM while its return on invested capital (ROIC) has improved from 6% to 16%.

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Disclosure: David Trainer, Kyle Guske II, and Sam McBride receive no compensation to write about any specific stock, style, or theme.

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