As the first half of 2013 ends, let’s look at the year-to-date top performing (and profitable) large cap stocks. Our goal is to identify some winners (and/or their peers) that look like winners going forward.
There are 557 large cap stocks (market caps of $10 billion plus) in the finviz.com universe. I narrowed these down to those with a positive P/E (profitable over trailing twelve months), of which there are 492. Had I not put that speed bump in place, electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA) would have crossed the finish line first, with a 222% return.
Top 10 performing profitable large caps
|Company||YTD Return (%)||P/E||Fwd. P/E||5-Yr PEG||EPS growth this yr (%)||EPS growth next yr (%)||ROE (%)||D/E|
|3. Green Mountain Coffee Roasters||78.6||28.4||20.4||1.2||74.0||14.6||17.8||0.15|
|4. Delta Air Lines||57.5||17.3||6.0||0.3||17.8||14.6||(67.9)||N/A|
|6. CME Group||53.1||29.3||20.8||1.8||(50.3)||15.8||4.1||0.13|
|8. Life Technologies||51.0||31.4||16.0||1.8||17.1||9.9||8.9||0.51|
Yahoo! Finance & finviz.com; D/E is debt/equity; data to June 27.
Just because I’m not highlighting a stock doesn’t mean it doesn’t look attractive going forward.
Coffee: an attractive space
In addition to coffee being nearly recession-proof, there’s another good reason to add a coffee player to your portfolio: Green coffee bean prices are at a nearly four-year low, which should continue to give a nice profit boost to large buyers of the commodity. That’s assuming they don’t pass that cost-savings through to consumers, and — other than select packaged coffee producers, such as JM Smucker — that’s not been in their game plans. In fact, Starbucks Corporation (NASDAQ:SBUX) just increased prices last week.
In addition to Starbucks Corporation (NASDAQ:SBUX), single-serve king Green Mountain Coffee Roasters, which produces the Keurig and Vue machines, and Dunkin Brands Group Inc (NASDAQ:DNKN) should benefit. Dunkin Brands Group Inc (NASDAQ:DNKN)’ is an East Coast-rooted chain, traditionally focused on coffee and donuts, that’s now expanding to the U.S. West.
Some basic metrics:
|Company||YTD Return (%)||P/E||Fwd. P/E||5-Yr PEG||EPS growth this yr (%)||EPS growth next yr (%)||Operating Margin (ttm)||Profit Margin (ttm)||ROE (%)||D/E|
Yahoo! Finance & finviz
Let’s get this one out of the way: Dunkin Brands Group Inc (NASDAQ:DNKN)’ is a pass for now. With the exception of its margins (which will likely come down as it offers more food items), its numbers are uninspiring. It’s much smaller than Starbucks Corporation (NASDAQ:SBUX) — $4.6 billion market cap to Starbucks Corporation (NASDAQ:SBUX)‘ $49.2 billion — yet its projected EPS growth for next year is slightly less than Starbucks’. And, while debt is cheap these days, it’s a negative that it’s leveraged to the hilt (5.4 debt/equity).
Starbucks Corporation (NASDAQ:SBUX) makes the best long-term “core holding,” in my opinion. Granted, it might not be able to outperform to the same degree as Green Mountain over the shorter-term. However, it’s a time-tested leader, and a good match for long-term investors who don’t want to concern themselves with some of the potential drawbacks of Green Mountain, namely the ever-present threat of its K-Cups’ margins being squeezed by increasing competition. Starbucks Corporation (NASDAQ:SBUX)‘ ROE says it all: The company is very efficient at using shareholders’ money to generate profit.
Celgene Corporation (NASDAQ:CELG)
Celgene Corporation (NASDAQ:CELG) is a $49.8 billion market cap biotech company focused on treatments for cancer and immune-inflammatory related diseases.
Its drugs include Revlimid, Thalomid, Vidaza, Abraxane, Isodax, and Pomalyst. Abraxane is used to treat breast and lung cancers, while the others treat various blood cancers. Revlimid, the world’s best-selling multiple myeloma drug, is its blockbuster — accounting for 68% of revenue in 2012. The drug is patent protected until 2024 in the EU and 2027 in the U.S.
- Highly innovative management
- No big patent cliffs approaching
- Strong late-stage pipeline
- Solid metrics
- Reasonable valuation