Onward And Upward

10/26/2015


The Quadrix Performance score tends to work especially well in down markets. With that in mind, we identified stocks that have outperformed the S&P 500 Index and their respective sectors since the index's May 21 peak. Equally important, investors don't always need to settle for stocks with overstretched valuations. Most of these stocks boast above-average Value scores. We review two such stocks below.

Since the S&P 500 set its record high on May 21, CDW ($44; CDW) shares have surged 18%, outperforming the index by 23 percentage points. A supplier of hardware and software products, CDW has defied the downturn in personal computers. Global PC shipments slumped 10% in the first nine months of 2015, including an 11% decline for the September quarter, according to industry researcher IDC. CDW draws nearly 20% of its sales from PC notebooks and mobile devices. However, a diverse portfolio of more than 100,000 products and services helps cushion CDW from weakness in any one area.

CDW's total returns over the two-, three-, six-, and 12-month periods all rank in the top 15% of our research universe, contributing to a Performance score of 99. Yet the stock still earns a decent Value score of 51. It trades at 14 times estimated year-ahead earnings, ranking among the cheapest 35% of stocks in Quadrix. The average S&P 1500 tech stock has a forward PE ratio of 20. CDW is a Focus List Buy and a Long-Term Buy.


Foot Locker's ($70; FL) stock has delivered a total return of 18% in the past six months, second-highest among S&P 1500 Index apparel retailers, which have averaged a 12% decline. Foot Locker benefits from a cultural shift that has made athletic shoes more popular, as well as a natural barrier against internet competition; shoppers usually want to try shoes on to ensure a comfortable fit. Management's execution has led to market-share gains and steady growth. Annual per-share-profit expansion has exceeded 10% in five consecutive years on sales growth of at least 4%.

Management expects per-share profits to grow by double-digits in the second half of fiscal 2016 ending January. Analyst estimates have drifted higher over the past 90 days, with the consensus projecting growth of 13% in the October quarter and 12% in the January quarter. Foot Locker is a Focus List Buy and a Long-Term Buy.

SHARE-PRICE MOMENTUM PLAYS
We screened for recommended stocks outperforming their sectors and the S&P 500 Index since the index peaked on May 21. Most have also topped both benchmarks in the past month and since the index bottomed on Aug. 25. Consider Nvidia ($27; NVDIA), up 31% since the S&P 500 peaked, outgaining the index by 36 percentage points. The stock also rallied 16% in the past month, outpacing the average tech stock by 12 percentage points.
-------------------------------------------- Stock Performance --------------------------------------------
------- Past One Month -------
----- Since Aug. 25 Low -----
----- Since May 21 Peak -----
------- Quadrix Scores -------
Company (Price; Ticker)
Price
Change
(%)
Versus
S&P 500
(%)
Versus
Sector
Average
(%)
Price
Change
(%)
Versus
S&P 500
(%)
Versus
Sector
Average
(%)
Price
Change
(%)
Versus
S&P 500
(%)
Versus
Sector
Average
(%)
Value
Perfor-
mance
Overall
Alphabet
($672; GOOGL)
1
(2)
(4)
10
2
(1)
21
26
26
25
92
73
C.H. Robinson
($72; CHRW)
5
2
3
12
4
6
12
17
20
49
83
90
CDW ($44; CDW)
8
5
3
16
8
5
18
23
23
51
99
91
Comcast
($61; CMCSa)
5
2
4
12
4
6
7
12
12
70
68
93
Disney ($110; DIS)
6
4
6
15
7
8
0
5
4
36
64
64
Foot Locker
($70; FL)
(4)
(7)
(6)
3
(5)
(4)
10
15
13
55
80
93
Goodyear Tire &
Rubber ($32; GT)
6
3
5
17
9
10
2
7
6
91
92
98
Lear ($117; LEA)
9
6
8
23
15
17
0
5
4
86
88
98
Nvidia ($27; NVDA)
16
14
12
35
27
24
31
36
37
34
98
81
Southwest Airlines
($41; LUV)
4
2
3
12
4
7
10
15
19
74
81
99
Note: Quadrix scores are percentile ranks, with 100 the best.

 


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