Major League Baseball recently played its annual all-star game. That made me think about what stocks might be all-stars from the first half of the year. The real question? How will they do going forward?
My criteria for the stock all-stars are as follows:
- Stock gain surpassing that of the S&P500 index YTD.
- Motley Fool CAPS rating of five. [CAPS is a rating system used by investors who enter their thoughts at The Motley Fool as to how a stock will perform against the S&P500 over a certain period of time.]
- Large-cap company (i.e. from the “major leagues”).
Here is part of the starting line-up:
Science is terrific
The diversified high tech company Thermo Fisher Scientific Inc. (NYSE:TMO) had a great first half, with the stock up 30%. The company is a major supplier of scientific instruments, lab equipment, chemicals and other items. The company is in a growth mode, with earnings up nearly 50% over the last five years. Revenue has increased too, averaging a 5% annual gain over the same period. That growth should continue going forward as the pharmaceutical industry, which is a major customer, is expanding.
Other all-star stats it has include a relatively low long term debt to equity rate of 0.43, and a low payout ratio of 16.0, which allows plenty of room for the dividend to be bumped up if the company so desires.
Clothing not optional
Another all-star that had a fantastic first half is the clothing and footwear marketer VF Corp (NYSE:VFC). The stock rose 28%.
VF Corp (NYSE:VFC) has consistently reported strong results over long periods of time. Earnings have doubled and revenue increased by 47% over the past five years. The company would like to see a repeat of these results in the foreseeable future, and plans to get there by focusing on growing its low-cost online business instead of building more brick and mortar stores. It also a great record of acquiring new brands, and that will likely continue.
Other superior stats include a low debt/equity ratio of 0.28, high gross margin (50%) and a history of dividend increases going back 40 years.
Another top performer during the first half was Ecolab Inc. (NYSE:ECL).The stock leaped 15%. The company, which provides technology and services that make water cleaner and food safer, has reported accelerating growth in the last year. Earnings are up 50% and revenue has soared 74%. It hasn’t been a slouch over the long haul either, with solid double-digit (13%) revenue growth over the past five years.