This list does not provide a template for a fully diversified portfolio – it is heavily weighted toward technology and communications companies, with limited to no exposure to large sectors of the market like Industrials, Financials, Real Estate, Energy or Utilities

Many of these companies do show up in client portfolios – others do not as they may be too overvalued to purchase at this time, we may have full allocations to their sector without them, they may not meet our financial strength requirements, the projected outlook for them is not as solid as their past performance, they may have just recently joined this list and are candidates for purchase, or one of many other reasons.

There are other metrics that I follow that will give me other lists of companies, some of which we own and some of which we do not. The point is that there is not one way to know whether you want to buy or sell a company – but it all comes down to fundamental analysis of their financial statements, their industries, their competition, and their prospects. However, if you look at the 3yr and 10yr average returns of the companies on this list, they predominantly have been companies that you want to own and that have provided you with well above average returns.

So why wouldn’t we just own all of them and call it a day? It goes back to the fundamental analysis. If we look at a company like Quidel Corp you can see that it is fairly valued (an important factor if you want to be a buyer – remember in a previous blog post we discussed forward returns and how they are impacted by the price at which you buy a stock) and has had mid-20% average returns over three and ten years. But when you look at their forward prospects you have to stop and wonder if they will continue – I write that because Quidel Corp is one of the primary providers of the Covid-19 tests that have been so prominent in our lives for most of the past two years. Check out their stock price chart below: