Let me start by saying that we track a "Best of the Best" list at EarningsBeats.com. Technically, it's actually 3 "Best of the Best" lists - a Model Portfolio, an Aggressive Portfolio and an Income Portfolio. They each include 10 stocks that are weighted equally in the portfolio and held for three months. After the next earnings season is over, we cash in the 10 stocks in each portfolio and replace them with our next "Best of the Best" list. Here is the actual return of our Model Portfolio since its inception and the corresponding return of the benchmark S&P 500 over the same time period:
- Model Portfolio (since its inception November 19, 2018): +37.16%
- S&P 500 (since November 19, 2018): +9.33%
The concept is really simple and very easy to understand: buy the stocks that Wall Street currently loves, then ride them while they have strong momentum and show excellent relative strength among their peers. Rinse and repeat each quarter. Since the Model Portfolio began in November, the best three-month performer in the portfolio for any quarter has been eHealth, Inc. (EHTH). Check out the chart:
When you have a stock that rises 85% in 90 days, that tends to help boost overall returns. But it's not just one leading stock per quarter that determines the Model Portfolio's success. Each quarter, the majority of Model Portfolio stocks outperforms the benchmark S&P 500. It's the cumulative effect that has led the Model Portfolio to outperform the S&P 500 by 4 to 1.
Due to the overwhelming popularity of focusing on relative strength, not to mention the outstanding results above, our EarningsBeats.com community members wanted more. We delivered. We've since added an Aggressive Portfolio, designed to be riskier but with higher potential returns, and an Income Portfolio for those that want to invest in less risky, dividend-paying stocks. Each of them sticks with the relative strength philosophy, however. These other two portfolios began on May 19th. Here are the current returns for each portfolio, with the benchmark S&P 500's return as well.
- Model Portfolio (since the last 10 equal-weighted stocks were announced on May 19, 2019): +5.40%
- Aggressive Portfolio (since inception on May 19, 2019): +8.29%
- Income Portfolio (since inception on May 19, 2019): +2.65%
- S&P 500 (since May 19, 2019): +2.88%
Just one month into the current quarter, the Aggressive Portfolio and Model Portfolio have outperformed the benchmark S&P 500 by 5.41% and 2.52%, respectively. That's very significant outperformance at a time when 80% of mutual funds underperform the S&P 500. The Aggressive Portfolio is being led by Enphase Energy (ENPH), which has climbed a very impressive 24.44% since the May 19th unveiling. Here's the chart:
Putting together a portfolio of stocks that are relative leaders increases our chances of success in the stock market. To increase our odds even more, we don't consider a stock unless it's already beaten Wall Street consensus estimates as to both quarterly revenues and quarterly EPS. In other words, we marry strong fundamentals with strong technicals. We currently have a ChartList of 280 such companies and every company in our portfolios must be on this ChartList. If you'd like a link to review this entire ChartList, simply CLICK HERE to sign up for our FREE newsletter, which is delivered to the email address you provide three times a week. You will then be directed to a page that includes a link to these 280 charts.
Seriously, change the way you view the market and your trading/investing strategy now.
At your service,
John S. Hopkins, President