S&P 1500 Index stocks with high Quadrix Overall scores — our proprietary quantitive process — tend to outperform the rest of the index. Stocks with consistently high scores tend to do even better, observes Rich Moroney, editor of Dow Theory Forecasts.
The quintile of stocks with the most persistently high Overall scores averaged a 12-month return of 17.8%, versus 12.8% for Overall leaders that least frequently scored above 80. Here's a look at three stocks that meed this criteria. All three are also on our Focus List of top buy recommendations.
Chubb (CB) has delivered a total return of 14% in the past three months. That rally has pushed Chubb’s trailing P/E ratio to 15, in line with both its five-year norm and the median for property and casualty insurers in the S&P 1500 Index. But Chubb trades at a more attractive 12 times estimated 2023 earnings, a 14% discount to its industry median.
Chubb’s per-share profits are expected to climb 16% in 2023 on 8% sales growth. On Jan. 31, Chubb is expected to announce December-quarter earnings per share of $4.32, up 13%, on revenue of $9.28 billion, up 9%.
Analyst estimates have edged higher in the past 30 days. Chubb has topped the consensus profit estimate in eight straight quarters and the sales estimate in 52 of the past 53 quarters.
For the December quarter, analysts expect EOG Resources (EOG) to report 17% higher per-share profits on 2% revenue growth. Profit estimates have dropped in the past month, at least partly the result of fears that adverse winter weather disrupted production last month.
Management anticipates 10% higher well costs in 2023, up from a 7% rise in 2022. But EOG seems capable of generating strong free cash flow this year, translating into generous dividend distributions. EOG paid out $8.80 per share in regular and special dividends last year, exceeding its commitment of returning to investors at least 60% of annual free cash flow to investors.
Ulta Beauty (ULTA) holds a leading 25% market share for beauty-specialist retailers, estimates Goldman Sachs. Despite soft consumer sentiment, industrywide demand for beauty products remained robust through the end of 2022. U.S. sales of beauty products rose 7% year-over-year in December and 5% in November, said industry researcher NielsenIQ.
Ulta increased per-share profits and revenue more than 15% in six straight quarters. Analysts expect growth to slow in the coming year — but estimates are rising. The consensus calls for 1% higher earnings per share and 9% higher sales for the January quarter, followed by 5% profit growth in fiscal 2024 ending January on 7% higher revenue. The stock has rallied 7% in 2023 and 27% over the past six months.