Top Picks - Part 1

01/02/2004 12:00 am EST

Focus:

Welcome to our Annual Top Picks Report, in which we ask our Money Show Digest contributors to select a favorite stock for the year ahead. Last year's 25 Top Picks are up 61%. Here's an update on last year's picks, a review of the top performers, and an overview of the new Top Picks for 2004. (To go to Part 2 of this special report, click here.)

The outperformance of the 2003 Top Picks has been even greater than we expected:

  • Only two of the 25 stocks in last year's report fell in price, and one of those was down just 5%.
  • 80% outperformed the major market indices. Only 5 of the 25 gained less than the roughly 23% return of the Dow and the S&P 500, and those were primarily income selections or alternative stocks recommended as a portfolio hedge.
  • The average gain of all 25 picks from last year's report showed an average gain of 61%.  (Prices are based on the change between the market close at year-end 2002 and the closing prices as of 12/22/03. We will provide detailed results in next week's issue when year-end price data will be available.)

All in all, we think this is a pretty remarkable record. We emphasize that this annual feature is not intended as a "contest" between the advisors. It would be exceedingly unfair to compare the performance of a high risk-oriented advisor whose Top Pick comes from among volatile, small cap tech stocks with a Top Pick that comes from an advisor whose expertise is low-risk, income investments. Our Annual Top Picks report includes selections from both extremes. It is this mix of both conservative and aggressive picks that makes the overall 61% return from all 25 selections most impressive.

Despite our aversion to having this report viewed in a competitive light, we nevertheless feel that several advisors deserve special mention for the exceptional performance of their 2003 picks. The top five performing advisors in the 2003 Top Picks report all showed triple digit gains:

  • John Buckingham, editor of The Prudent Speculator, chose a "growth and value" stock in the out-of-favor home building sector, Toll. Brothers. The stock has since risen 103%.
  • Jim Collins, editor of OTC Insight and Listed Insight, and specialist in momentum investing ("buy high, sell higher"), had chosen luxury goods maker, Coach Industries. The stock is up 121% for the year.
  • Josh Wolfe, editor of the Forbes/Wolfe Nanotech Letter, went with Veeco Instruments, a player in the emerging nanotechnology market. The stock is up 137% for 2003 to date.
  • Fred Hager, editor of the online fredhager.com, took a chance with Rambus, a high tech firm which had been embroiled in a lawsuit over intellectual property rights. Following favorable court rulings, the stock has since appreciated by a spectacular 293%.
  • Vahan Janjigian, editor of The Forbes Growth Investor,  selected American Superconductor. The company, which provides products to serve the electric power grid, benefited from the blackout of 2003. Since his initial recommendation, the stock has soared 301%.

Other notable performers in our 2003 report were Jamie Dlugosch, who at the time of our 2003 report had just launched his newsletter, The Rational Investor. His pick of credit card marketer Metris rose 75%.  Jim Oberweis, editor of The Oberweis Report,  selected generic drug firm, Able Laboratories. The stock is up 57%. John Dessauer, editor of Investor's World, chose mortage firm, IndyMac, which has risen 62%. David Fried, editor of The Buyback Letter, chose bookseller Barnes & Noble, which is up in price by 80%.

There are several factors to keep in mind when reading this report. Many of our favorite Money Show Digest contributors are not included in this report simply because their schedules during the holidays did not allow them to participate. Others are not included because their expertise is more focused on shorter-term investing, and this report specifically focuses on selections recommended for the duration of 2004. 

All of last year's top performers have returned for this year's Top Picks report, and a number of new participants have joined in on this year's report. As such, we've expanded this special feature to include 35 Top Picks, which will appear in both this issue and in next week's Digest.

Obviously, no matter how confident we are in the expertise of our contributors, there are no guarantees about future performance, and we urge investors to carefully consider their own risk parameters and time horizon. We would also emphasize diversification. With that in mind, we hope this special report provides you with a valuable shopping list of investment candidates for your 2004 portfolio.

Related Articles on