Title: Crushing Returns with the mechanical Maestro: A 22% Gain for the Robot Portfolio in 2024
Title: Crushing Returns with the mechanical Maestro: A 22% Gain for the Robot Portfolio in 2024
Each year, the Robot portfolio, a hypothetical stock-picking strategy, generates a collection of ten relatively unpopular stocks. The idea behind this unconventional approach is that stocks tend to excel when they surpass expectations, and low expectations are easier to surpass.
Over the past 26 years, the Robot portfolio has yielded an impressive 1,710% return, surpassing the 673% return of the S&P 500 Index. It's important to note that the results presented here are hypothetical and should not be confused with actual client performances. Past performance does not guarantee future success.
The Robot's selection criteria involve choosing the ten stocks that sell for the lowest multiple of their earnings, provided they meet certain conditions:
- The company must have reported a profit for the last four quarters.
- The market value of the stock must exceed $500 million.
- The company's debt should be less than its equity (net worth).
The Robot has outperformed the S&P 500 only 13 times over the past 26 years. However, when it performs well, it often does so exceptionally well. In four years, the Robot's return has exceeded 50%. In six years, it has ranged between 25% and 50%. Unfortunately, there have also been significant losses. For instance, the portfolio suffered a 60.8% loss during the recession-stricken year of 2008, a period when the S&P 500 Total Return Index declined by 37%.
Overall, the Robot's compound average return has been 11.8% per year, compared to the S&P 500's 8.2% average return. Last year, the Robot portfolio returned a generous 22.7%, but it still fell short of the S&P 500's 25% total return. CNX Resources Corp., a natural gas producer, was the top performer, booking a 83% gain. Conversely, PBF Energy Inc. (PBF), a refiner, recorded a significant loss of almost 40%.
As we approach 2025, a new cohort of stocks has been selected for the Robot portfolio, listed in order of their lowest price-to-earnings ratios.
- Site Centers Corp. (SITC) has a P/E ratio of 1.1, positioned at the very bottom of the list. This real estate investment trust specializing in shopping centers is currently selling at a discount due to its recent property spin-offs.
- Vital Energy (VTLE), an oil and gas company from Tulsa, Oklahoma, has a P/E ratio of 2.2. Despite its recent revenue and earnings decline, the company still shows promise with its strong portfolio of properties and future plans.
- Agios Pharmaceuticals Inc. (AGIO) has a P/E ratio of 2.8. This biotech company focuses on finding treatments for cancer and rare diseases, although its stock has suffered significant losses in the recent decade.
The rest of the newly selected stocks, including Shenandoah Telecommunications Co. (SHEN), International Seaways Inc. (INSW), Ball Corp. (BALL), FMC Corp. (FMC), Dorian LPG Ltd. (LPG), Steel Partners Holdings LP (SPLP), and Northern Oil & Gas Inc., all have their specific P/E ratios and unique characteristics, making the Robot portfolio a diverse mix of relatively unpopular yet potentially high-reward stocks.
The Robot portfolio, in its latest selection, includes Agios Pharmaceuticals with a low P/E ratio, potentially making it a high-reward stock despite recent losses. (agios pharmaceuticals)
Vital Energy, an oil and gas company with a promising future, has a relatively low P/E ratio, making it a contender in the Robot portfolio. (vital energy)
The Robot portfolio maintains diversity, also including FMC, a chemical company with a low P/E ratio, in its latest unconventional stock picks. (fmc)
Ball Corporation, a company with a low P/E ratio, is part of the Robot portfolio's 2025 lineup, underscoring the portfolio's strategy of focusing on stocks with high potential returns. (ball corp.)