Top Picks 2017: Mairs & Power Growth

Robert Carlson Editor, Retirement Watch

Stock investors need to be more selective in 2017. The dollar is likely to remain strong against most other currencies and that should harm the revenues and profit margins of larger global companies, suggests Bob Carlson, editor of Retirement Watch.

Rising wages, lower productivity, and higher commodity prices also are headwinds against earnings and margin growth for many companies.

Investors would do well to focus on a relatively few companies that are likely to do well in this environment.

A good way to invest in select companies that are likely to return more than the major indexes is Mairs & Power Growth (MPGFX), which is our top growth-oriented pick for 2017.

The fund invests in U.S. companies of any size, though the portfolio tends to be weighted toward mid-cap and small-cap companies.

Most of the companies sell primarily in the U.S., so they aren’t likely to be hurt by a strong dollar. Companies owned by the fund tend to be based in the Midwestern United States.

The fund is based in Minnesota, and management believes its location aids it in understanding companies based in the region and gives it an edge over money managers located on the coasts.

The fund’s been around since 1959 and kept its investment process intact through several management changes.

It consistently beats the indexes by focusing on a relatively small number of companies that it believes are well managed and will continue their strong growth trends.

Recently, it owned 52 stocks and had almost 38% of the fund in its 10 largest positions.

The top holdings were Ecolab (ECL), US Bancorp (USB), St. Jude Medical (STJ), 3M (MMM) and Honeywell International (HON). The fund was 31% in industrials, 24% in health care and 13.6% in financial services. It returned about 17% in 2016.

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