Top 10 “Perfect” Stocks for February

NYSE: GM | General Motors Company  News, Ratings, and Charts

GM – GM, MINI, MLCO and VOD headline a list of 10 “perfect” stocks that combine growth + value + momentum + income. See how it all adds up below.

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I recently gave a presentation that included my winning formula for stocks in 2020 (see that  here). This formula is being shared because we are not going to repeat the 31% gain for the S&P 500 as we saw last year. Instead investors should expect more pedestrian returns of 5-10% on average.

Gladly for those willing to put in a little more work, they can uncover stocks that will rise above the pack. This article will give you a running head start on that journey because these stocks pack an exciting combination of elements:

Growth + Value + Momentum + Income = “Perfect Stocks”

At the end of the article I give an in-depth review of the research study applied to uncover these 10 perfect stocks. However, below I will also highlight 4 standout stocks from this list that should make it clear what why they may deserve a spot in your portfolio.

Mobile Mini (MINI)

The growth part of the MINI story might sound the most surprising when I tell you that their main business is public storage. That is usually a steady as you go industry that is more about being a cash cow. But MINI is dominating a niche area which is to have mobile storage containers which analysts believe will propel them to 14% average annual earnings growth over the next few years.

The strength of Mobile Mini’s business model was on clear display with their most recent 17% earnings beat that has earnings estimates rolling higher once again. MINI shares popped higher on the news, but still a far cry from the average target price of $50…and even further from the street high $64 target. So it certainly checks the boxes for value. As for momentum that is also in the plus column as shares sport a POWR Rating of A (Strong Buy). No surprise the Trade Grade is also an A given how shares are up nearly 14% on the year.

Lastly, is that they also ring up the cash register with a very welcome 2.6% dividend yield. As I keep explaining in my recent market commentary, low bond rates is the #1 reason for the length and strength of this bull market. And yes, it makes income paying stocks all that much more attractive. Gladly in the case of MINI, the dividend is just icing on top of an already delicious investment cake filled with growth, momentum and value.

(FYI: I recently added MINI to the Reitmeister Total Return portfolio).

General Motors (GM)

All the excitement in the auto space goes to TSLA. In fact, their market cap is now the same as GM and Ford combined.

So GM is for the value seekers who appreciate that this auto giant is still growing at 11% a year while offering nearly 35% upside to its fair value target price. And just for good measure GM throws off a uber-attractive 4.3% dividend yield helping to pad your final return. So TSLA may be the sexier story, but GM is probably the better investment.

Melco Resorts (MLCO)

Melco was one of the best growth stories back in 2017 and 2018 when they began to flex their muscle as a main player in the Asian gaming world. As you can imagine MLCO took it on the chin over the past year as the US-China trade war flared up which brought with it concerns over the health of the Chinese economy.

Just as MLCO shares were starting to rebound from that drama it was hit with the next concern emanating from China. Of course I am talking about the coronavirus and how that is most harmful to travel related stocks like MLCO.

However, for those who can look out to the horizon with no trade war…with no coronavirus…it is hard not to appreciate how MLCO should be able to achieve 20%+ annual earnings growth.

On the value front Melco is in 3rd place on our list with 38% upside to fair value. And if all that wasn’t attractive enough it also brings a 2.89% dividend yield to the party. Yes, all stocks are a bit of a gamble, but this gaming company looks like a pretty good bet for the long haul.

Vodafone (VOD)

VOD is the most surprising stock on this list given that is a $53 billion market cap telecom company. Of course they provide ample income of 4.9%. However, what is most shocking is the well above average 14.5% earnings growth projection. That is about 3X the pace of the average publicly traded stock.

Value investors will be drooling over Vodafone’s list topping 50% upside to fair value. VOD is also the best choice for those who are a touch more risk averse. That protection comes in 3 forms: Largest market cap + defensive telecom industry + largest dividend. That makes VOD add up to one impressive stock.

Putting It Altogether

The point of this “perfect” strategy was not to settle for just one attractive element. I wanted to load up on as many positive attributes as we could. But gladly each type of investor should find at least one that floats their boat.

Also all the stocks have momentum given the inclusion of the POWR Rating. But remember there are 4 sub components of the rating that help you lock down on the best shares (Buy & Hold Grade, Trade Grade, Industry Rank, Peer Grade).

Just click on the tickers below to continue your research and discover the component POWR Ratings on each stock.

CompanyTickerMarket Cap ($mil)Est. LT Growth %Div Yield %PriceTargetUpside %
VodafoneVOD$52,81414.464.90$19.73$29.6050.03%
Vistra EnergyVST$11,17622.692.18$22.93$32.5041.74%
Melco ResortsMLCO$11,14720.022.89$22.55$31.2238.45%
First BancorpFBP$1,99819.922.18$9.19$12.5036.02%
General MotorsGM$50,71510.864.28$35.49$47.8234.74%
Orange-AdrORAN$37,16113.723.68$13.97$17.1022.41%
Investors BancorpISBC$3,27512.004.03$11.92$14.5021.64%
Mobile MiniMINI$1,86814.002.60$42.31$51.2521.13%
HollyfrontierHFC$7,23010.003.13$44.80$54.1120.78%
Manulife FinancialMFC$39,19110.003.78$20.11$24.2520.59%

Want more great stock picks? Then check out these additional resources:

POWR Ratings Strong Buys List

Reitmeister Total Return portfolio

Details on Stock Selection Criteria for Perfect Stock List

Growth

Earnings growth is in short supply this year as we just went through another earnings season where the average company had negative earnings growth. So I wanted these stocks to pack at least a 10% growth rate to stand out above the pack.   VST tops this list at 22.7% expected growth with MLCO right behind at 20%. Note that we also only are reviewing stocks that are $1 billion market cap or larger. That is because underneath that level is a touch too much risk to truly find stocks worthy of being called “perfect”.

Momentum

This one is easy. We are going to rely upon the POWR Ratings system which is focused on stocks displaying the best momentum. In this case I widened our lens one notch to include both A & B rated shares. Meaning just the Buy rated stocks…no Holds or Sells.

Income

The average S&P 500 stock is providing a 1.74% dividend yield. So I want all of these stocks to be above that mark. VOD tops the charts at 4.9% yield. But also check out other impressive income plays like GM and ISBC.

Value

When the market is making new all time highs, then there is going to be a shortage of value stocks. So you have to dig a bit deeper to find them.

In this case it was the final part of the screening process to see those stocks that had the most upside potential. Gladly our stocks range from 20.6% upside for MFC up to 50% gain potential for VOD. This is measured by the distance between their current price and the average Wall Street analyst target. Note that there are many analysts expecting even more upside from these stocks. Meaning that if you explore the stocks further you will likely see that other analysts expect 10-20% more upside than the average.

 


GM shares . Year-to-date, GM has declined -3.03%, versus a 4.83% rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Reitmeister


Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
GMGet RatingGet RatingGet Rating
MINIGet RatingGet RatingGet Rating
MLCOGet RatingGet RatingGet Rating
VODGet RatingGet RatingGet Rating

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