We have a couple traditions here at Stock Gumshoe… we call out one of the worst teaser stock ideas around Thanksgiving and identify the “Turkey of the Year,” and then, as the year comes to a close and holiday merriment washes all around us, we call attention to the best teaser stocks of the year.
The list is not an impressive one, I’m afraid… things didn’t look all that bad when we were compiling our Turkey of the Year results a little over a month ago, but everything has gotten a little dicier in the market in recent months (we cut off the “Turkey” picks in September or October)… so now we sit with a tracking spreadsheet that shows 31 stocks teased this year that have beaten the market since they were touted (and about 16 of them had absolute positive returns, versus just “better than the market” returns)… and 92 teased that have trailed the market.
That doesn’t change the bottom of the spreadsheet much — we’re still looking at the worst performers being mostly small and flighty stocks like Apricus Biosciences (APRI), Terra Tech (TRTC), Leading Edge Materials (LEMIF), and, of course, the Turkey winner Indivior (INVVY) is still down near the bottom.
But we’re not focusing on that — it’s the end of the year, and the markets are lousy enough that you can find pessimism wherever you look, so now we’re doing our Christmas season tradition: Identifying the best teaser picks of the year.
Mathematically, that’s easy… here’s the top ten from the spreadsheet (as of last Friday):
|Date||Company||Ticker||Newsletter||Editor||Publisher||Buy Price||Current Price||Percent Change||Stock vs. S&P|
|1/4/2018||The Trade Desk||TTD||Motley Fool Stock Advisor||Dave Gardner, Tom Gardner||Motley Fool||$48.35||$106.55||120.37%||132.34%|
|3/12/2018||The Trade Desk||TTD||Motley Fool Stock Advisor||Dave Gardner, Tom Gardner||Motley Fool||$57.95||$106.55||83.87%||96.88%|
|1/11/2018||Innovative Industrial Properties||IIPR||Crisis Investing||Nick Giambruno||Casey Research / Stansberry||$30.25||$44.98||48.69%||62.09%|
|6/27/2018||Eli Lilly||LLY||Dividend.com Premium||$85.49||$109.42||27.99%||39.14%|
|6/7/2018||Hershey||HSY||Stansberry’s Investment Advisory||Porter Stansberry||Stansberry Research||$91.77||$105.91||15.41%||28.88%|
|6/14/2018||Verizon||VZ||Technology & Opportunity||Jason Stutman||Angel Publishing||$48.06||$54.92||14.27%||27.42%|
|9/11/2018||American Tower||AMT||Near Future Report, The||Jeff Brown||Bonner & Partners||$147.31||$158.00||7.26%||24.00%|
|10/11/2018||Aerojet Rocketdyne||AJRD||Crisis and Opportunity||Christian DeHaemer||Angel Publishing||$30.49||$33.75||10.69%||23.47%|
|10/3/2018||Tencent||TCEHY||Motley Fool Rule Breakers||Dave Gardner||Motley Fool||$38.62||$39.54||2.38%||19.22%|
|9/11/2018||Nokia||NOK||Near Future Report, The||Jeff Brown||Bonner & Partners||$5.36||$5.49||2.43%||19.17%|
And I’m a little bit reassured that I hold six of the ten in my Real Money Portfolio (OK, fine, a couple are duplicates), but what lessons can we learn from these stocks?
Well, first I should be fair and include the stocks we would have mostly bypassed when we looked at these numbers a year ago — the ones that were picked toward the end of 2017. Because of timing (the market surged in the first part of this year before coming back down), the best picks from late last year did a lot better than the best picks in mid-2018… here are the stocks that could have been included if we had gone back 14 months instead of 12…
|Date||Company||Ticker||Newsletter||Editor||Publisher||Buy Price||Current Price||Percent Change||Stock vs. S&P|
|10/2/17||Intelsat||I||Technology Profits Confidential||Ray Blanco||Agora Financial||$5.37||$19.42||261.64%||266.45%|
|10/31/17||Innovative Industrial Properties||IIPR||Crisis Investing||Nick Giambruno||Casey Research / Stansberry||$19.54||$44.98||130.19%||136.72%|
|11/8/17||Nearmap||NEAPF||Australian Small-Cap Investigator||Sam Volkering||Port Phillip Publishing||$0.54||$1.23||127.78%||134.54%|
|10/31/17||Canopy Growth||CGC||Crisis Investing||Nick Giambruno||Casey Research / Stansberry||$12.79||$26.22||105.00%||111.52%|
|11/30/17||BioTelemetry||BEAT||Forecasts & Strategies||Mark Skousen||Eagle Financial Publications||$27.65||$53.48||93.42%||102.40%|
|10/23/17||The Trade Desk||TTD||Motley Fool Stock Advisor||Dave Gardner, Tom Gardner||Motley Fool||$63.31||$106.55||68.30%||74.48%|
|12/7/17||Advanced Micro Device||AMD||Exponential Stock Investor||Ryan Dinse||Port Phillip Publishing||$9.94||$16.93||70.32%||79.67%|
|12/5/17||AMD||AMD||Near Future Report, The||Jeff Brown||Bonner & Partners||$10.00||$16.93||69.30%||77.86%|
|12/15/17||Five Below||FIVE||Cabot Growth Investor||Mike Cintolo||Cabot||$68.29||$90.38||32.35%||42.60%|
|11/16/17||Elekta||EKTAF||Stansberry Venture||Dave Lashmet||Stansberry Research||$8.55||$11.56||35.20%||41.86%|
And to be fair, I don’t even think Ray Blanco actually picked Intelsat in his “Halo-Fi” ads — though that was one of the possible guesses.
There are clearly some things that pop out — first, that several of these teaser pitches were repeated many times over the past year (or even longer)… the Motley Fool has been gaga for The Trade Desk in lots of different ad pitches, Ray Blanco has blanketed the world with his “Satellite Internet” pitch for more than a year with few updates).
Second, a lot of marijuana stocks are still up nicely from last winter, even though they’re well off their highs.
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Third, that some “safe” stocks are starting to stand out after the recent carnage in growth stocks — Eli Lilly, Nokia and Hershey would not have been on this list a few months ago.
And finally, which you’ll see some more info about in a moment, it’s interesting that several of these stock picks were part of a group of picks all teased at the same time (like Moog and Maxar along with Aerojet Rocketdyne, for example), and in most cases those pitches included some stinkers along with the strong performer.
But I’ll let you draw your own conclusions on why these might be the “best” — I’ll share below my “Quick Take” from each of those teaser solution articles, with the wording being what I posted at the time (hopefully they’re not too embarrassing, I’ll add a little extra note where needed to explain), and give you the link to the article if you want to follow up or see what other readers were saying at the time.
This isn’t a 100% certain match, but it seems the Motley Fool folks are doubling down again on TTD as a growth idea in digital advertising. I do like the stock, and have been contemplating adding to my small position but haven’t done so yet — I may grow this holding a little before they report earnings in mid-February, I suspect that they will beat the low expectations they set last quarter and I do like the strategy and the CEO… his recent (free) interview with the Fool is worth reading.
I like The Trade Desk and have bought a small position over the past six months or so… I think they have a good avenue for growth by collaborating with both advertisers and ad agencies to enable more efficient and effective programmatic ad buying (meaning, automated digital ad buying), and I like that they have a strong founder and insiders who hold a lot of shares and a clear strategy. No sure thing, not for a minnow in this business dominated by whales, so my position is small because of the risk… but I think you can rationally buy below $65 given the forecasts for 2019 earnings (that’s a forward PE of about 30). Likely to be volatile, current stop loss trigger is in the high $30s.
It’s really hard to buy stocks that have surged this dramatically, as most pot stocks are climbing on huge optimism about the legal recreational markets of California and Canada that will emerge this year. I did buy shares of IIPR, which have been on my watchlist for a while, they’re a REIT doing sale/leaseback deals with medical marijuana facilities and have a chance at pretty dramatic dividend growth if their future deals are as good as their first couple purchases. Canopy Growth is the best company I’ve ever watched in the marijuana space, but trades at a ludicrous valuation and I’ve never owned it, GrowGeneration has some appeal as a retailer trying to consolidate the hydroponics supply business, but jumped 50% today thanks to Casey and that seems silly. Kush Bottles is a packaging supplier, I don’t understand why they would have any competitive advantage but they are at least profitable… and Cannabis Wheaton has a great-sounding business model as a streaming “financier” in the pot industry akin to the mining royalty and streaming companies, but the financials are nowhere near in place to justify the valuation — I think you’d have to have an incredibly optimistic view of marijuana pricing and CBW’s ability to access cheap capital to take that one seriously.
They’ve added this to their “Best Dividend Stocks List”, and it’s probably a reasonable choice. Going by the financials and the forecasts I’d find Bristol-Myers Squibb (BMY) slightly more attractive at current valuations, with a higher dividend and growth, but LLY is likely to be more stable and has done better than their average pharma peers in recent years. All drug stocks have company-specific and drug-specific risks, which you can bypass with an indexed ETF like iShares US Pharmaceuticals (IHE), though you sacrifice some of the performance (and fun) that the best individual stocks can provide, and still face the overriding risk factor of U.S. drug pricing regulation that looms over all pharmaceutical stocks. I don’t currently own any big drug stocks and I’d generally find service providers, device makers and royalty investments in the space more appealing (I currently own LGND and some healthcare REITs in the Real Money Portfolio), but LLY and most of its competitors are priced fairly as long as price controls don’t blow up the industry — and given the might of the PHARMA lobbyists, that may be a safer bet than fearful investors expect.
(I was wrong on that, by the way, LLY has done dramatically better than BMY and the broader sector ETF, both of which are down ~10%)
This is an admirable company with a valuable portfolio of brands and, as Porter notes, it’s capital efficient because of those brands and has consistently paid a rising dividend. Worries about rising costs and changing consumer tastes have brought the stock down to a more appealing valuation recently, following their deal to buy snack-maker Amplify (Skinny Pop), though it’s still not objectively cheap on the surface, so I bought a few shares myself — on just a PE basis, it’s about as cheap as it has been since the dot-com crash, with a near-3% yield and likely 5-10% earnings growth in future years. Not sexy, but the kind of ballast I like to balance the more speculative stuff in my Real Money Portfolio.
These are all pitched as beneficiaries of the move to 5G wireless, which will be faster and require huge capital investments from the telecom companies and others (including Verizon). All are genuinely exposed to 5G, though earnings growth expectations for all three are fairly tepid in the near term. None look terrible, though I prefer Skyworks (SWKS) and Qualcomm (QCOM) as 5G plays for now, though both are more driven by the smart phone cycle (and Qualcomm by NXPI and its Apple litigation, both of which should be resolved this year).
(Joke’s on my for Skyworks and Qualcomm, by the way — I stopped out of SWKS, which has done almost as poorly as ZAYO… QCOM and CRNT have muddled along near break-even, Verizon is the only real winner in the bunch at this point)
INVISIBLE FIBER AND A “$150,000 WINDFALL” FROM “WEIRD NEW ANTENNAS” — WHAT’S JEFF BROWN AT BONNER TALKING ABOUT? (7/25/18, then 9/11/18, American Tower or Crown Castle (CCI) or SBA Communications (SBAC)… and Nokia (NOK) and Snap (SNAP), then later Corning (GLW))
Nokia is an interesting low-risk play on 5G investment accelerating, since it’s cash-rich and investors have fairly low expectations, but it has disappointed for many years as they slowly gave up on their handset business, so you can see why investors might shy away — I own some call options on NOK as a very inexpensive “all or nothing” speculation that 5G investment could surprise next year, we’ll see. American Tower is a guess, it could also be Crown Castle (CCI) or SBA Communications (SBAC), and I generally prefer CCI — all are strong tower-owning REITs who could benefit from 5G if they can lock up good locations, but would also get hurt by the Sprint-Tmobile merger if it happens. Snap, owner of Snapchat, is a speculation on SNAP taking share back from Instagram and growing — 5G would help them, I suppose, but it would also help all other social media and wireless video providers… I’m not so impressed with SNAP, but expectations are certainly lower than they were so perhaps they’ll surprise me. I’m also speculating broadly on a potential rising 5g investment mania with option positions in Ericsson (ERIC) and Qualcomm (QCOM), and also equity stakes in Qualcomm and the disappointing-but-says-its-positioned-for-5G Skyworks Solutions (SWKS).
(Brown pitched this ad a couple different ways, but AMT was an outperformer starting either in July or September… NOK, SBAC and CCI beat the market, too, though not by as much… and the ad lives on with recent iterations as the “C-V2X” pitch. I’ve since sold SWKS and bought CCI, and made NOK a larger part of my portfolio).
Moog is an established high-end component maker in lots of industries, Aerojet is the “go to” company for rocket engines, both are reasonably priced for a solid aerospace/defense market if budgets continue to rise and may be worth some more research — AJRD has had an appealing dip lately, Moog just started paying a dividend. Maxar is a guess for the third one, primarily because of the DigitalGlobe part of their business, but they own a variety of companies focusing on both communications and imaging satellites — they’re much more levered and have been struggling a little lately, and more recently are down 25% following a short attack that looks fairly compelling after a very superficial read on my part, so be careful.
(Maxar turned out to get further clobbered, reinforcing that short thesis… Moog beat the market too, just not as strongly as AJRD)
This is a look at two different Motley Fool ads that are running, though they reference each other to some extent — the Fool has been teasing “next gen media” and a “little black box” in a clear tout of Tencent… and they’re also pitching the “death of cable TV” with a tease that points right at ad tech company The Trade Desk. I have exposure to both in the Real Money Portfolio and like both, though they’re obviously expensive — I just added to TTD a few weeks ago and think it’s well-positioned for a long growth runway, and Tencent is falling and getting more attractively priced because of Chinese gaming regulation, which could hurt their business for a while as the freeze on new licenses persists, with some risk of really damaging their biggest profit generator if regulation turns out to be onerous when licensing restarts. The other names are guesses based on the themes they talk up and/or the stocks that I know have been in the Motley Fool portfolios.
(I had some exposure to Tencent at the time, but was stopped out… I still own The Trade Desk)
And going back a bit further to include some late 2017 “winners”:
RAY BLANCO’S “HALO-FI” — WHAT’S HIS TEASED “DEATH TO CABLE” STOCK? (first published 10/2/17, but re-published every couple months as the ad was updated and recirculated, including recently… probably wasn’t really teasing Intelsat, but possible)
Ray Blanco is pitching OneWeb as the developer of a L.E.O. satellite constellation that will deliver global broadband internet at low cost… that’s possible, and it is their plan, but they are not public yet and investing in any of their backers (principally Softbank now, though also SATS, QCOM and a few others, including Intelsat, which whom they had a failed Softbank-backed merger agreement last year) seems unlikely to lead to 5,000% gains anytime soon. They haven’t filed their S-1 to go public yet, something Blanco has been teasing as imminent since September of 2017, and it seems to me that a merger is more likely than an IPO, but you never know. No rush in my book, and no, you can’t cancel your cable internet yet — sorry. First launch has been delayed now to the end of 2018, the goal has been beginning to cover rural Alaska by sometime in 2019. Intelsat has been a huge winner for non-OneWeb reasons recently, Qualcomm’s still the only one in that group that interests me (I own shares and options on QCOM)
(Still have that Qualcomm exposure… Intelsat had an exceptional Spring and Summer in 2018, the rest of those stocks were unimpressive, only QCOM beat the market, and not by much)
Canopy Growth is the easiest stock to buy in marijuana… they have a huge head start in Canada, and a strong brand that should be valuable to recreational consumers if brands become an important part of the pot economy (no guarantees), but the stock is also super-high after Constellation bought 10% this week, and they report in a couple weeks. Too rich for my blood today, though I’ve missed this one before. Innovative Industrial Properties is a startup REIT that intends to own marijuana cultivation facilities — the economics look great, but there’s clearly some regulatory risk (and execution risk — they have only two properties so far), so this one catches my fancy enough to watch for a while.
(Still haven’t ever owned Canopy, for what it’s worth, though IIPR has become a substantial holding)
“WHAT HAPPENS WHEN THE WORLD’S RICHEST MAN MAKES THE BIGGEST STRATEGIC BLUNDER OF HIS CAREER?” (11/8/17, Nearmap, NEA.AX)
Nearmap is an aerial imaging company — they provide frequently updated high-resolution 3D images of higher-population areas in Australia and the US as a subscription service (for builders, architects, real estate folks, urban planners, etc.). Interesting business that has appealing scalability if they can keep ramping sales effectively in the US, largely because the same investment in image capture can supply 1,000 customers as easily as 1. Don’t know if I like the valuation yet, but it looks like they’re easing toward profitability and the business intrigues me.
This is a relatively expensive but growing mobile health company — their main product is a monitor for cardiac irregularity, and they’ve been trying to consolidate that segment and grow in adjacent areas (including the acquisition of LifeWatch this year). I don’t think there’s much chance of 11,000% gains, but it looks like a reasonably appealing growth stock if you can get comfortable with their market positioning — the biggest risk is probably competitive pressure and the insurance company interest (or lack thereof) in covering the monitoring service, which is where they’re probably most likely to see recurring and growing profits if the product does well. I don’t know anything about the market or the reimbursement trends, and I don’t know whether the competition from other monitoring services is likely to be a problem, but the business itself looks reasonably appealing at first glance… despite the 10% pop today on the news that they’re partnering with Apple.
AMD is pitched by close to half of the “blockchain technology” teases we’ve seen, and is a major beneficiary but is also large and competes with both Intel and NVIDIA, I’m not all that interested but I’m probably biased against them following decades of weak performance. BrainChip has an interesting AI accelerator chip and software that might be a h it someday, but it’s early and they’re on their first customers and I don’t know what the competitive position is… Weebit is teensy, an Israeli company trying to develop ReRAM for faster memory, and they’re small enough that they could do anything and do have a former Intel bigwig on the board, but every giant company is also developing next-generation memory so I don’t know what their odds might be. Not buying any of them, personally.
(Timing worked nicely on AMD there, though it has obviously come down more recently… Brainchip and Weebit Nano never really took off, both are down ~40%)
I kind of like this one… it’s expensive, but it offers a broader technology and tracking portfolio to ad buyers than Criteo does, and it’s growing fast and profitable. They have an opportunity to offer themselves as a “white knight” for the ad buyers versus the dominance of Facebook and Google, so there’s some potential for big growth to surprise as they go forward, though expectations are also very high so any disappointing quarter will take a big hit. Next quarterly report is November 10, so I’m taking a small taste before earnings and will wait to see how the numbers look before adding more.
(That was my first personal purchase of TTD, the Fool teased it many times after that)
It’s still tough to buy a stock like FIVE, because it has run so fast and is trading at a forward PE of about 32, but that growth rate makes it much more reasonable if you can stomach the fashion-driven hits and misses — I don’t know if I’d jump on the stock at all-time highs, but I wouldn’t argue against nibbling a little bit and hoping there’s a little letdown after the Christmas shopping. They don’t report earnings again until March, so things could quiet down for a bit if the market ever takes a little vacation from bullishness.
(FYI, I started building a position in December and January in FIVE, and have added to it more recently — huge ups and downs this year with the rise and fall of growth stocks, now at about 28X forward earnings estimates)
Elekta is not that well known, but they are a largish company ($3 billion market cap) in the radiation oncology space — their new product that Lashmet is teasing is Elekta Unity, which just announced a six months (or so) delay in the approval timeline so won’t be getting a CE Mark by the end of this year, but does look pretty impressive (it’s the first high-powered MR-linac, a MRI built into a linear accelerator for precision imaging-guided radiation treatment). Elekta seems worthy of some more research, but I don’t see any reason to rush. On the flip side, my first wave of research this morning makes me feel inclined to short smaller competitor ViewRay (VRAY), which is soaring today probably because of the attention Stansberry is bringing to the sector (I’ve neither sold nor bought either of these stocks at this point, to be clear).
(FYI, VRAY is down 35%, so that short would have worked nicely — I didn’t trade on either of them)
So there you have it… the top 20 or so stock teaser picks of the past year+ — let those stock pickers luxuriate in their glory for a few minutes, and we’ll start the tally again next week!
Any other winners or losers of the past year that really stood out for you? Any favorite? You can always browse the whole list on our Tracking page, let us know if you think any other teased ideas merit more discussion.
Disclosure: Among the companies mentioned above I have long positions through either equity or call options on Amazon, Apple, Alphabet, Qualcomm, Nokia, Hershey, Five Below, The Trade Desk, Innovative Industrial Properties, and Crown Castle. I will not trade in any stock covered for at least three days, per Stock Gumshoe’s trading rules.