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Proprietary Data Insights Search Interest In The Juice’s Top 2023 Stock Picks
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3 Things The Juice Does To Buy And Hold Winning Stocks |
As much as we love to toot our own horn here at The Juice, we can admit when we were wrong. Or maybe half or temporarily wrong. In 2023, we made lots of general calls on stocks and the overall market. Like everybody else — duh — we were bullish the big tech names as well as the broad market via the SPDR S&P 500 ETF (SPY) and Invesco QQQ ETF (QQQ). Like shooting fish in a barrel really. While we remain bullish on all of the above, we’re more proud of the other stock picks we made in 2023, even the one that produced a negative return. Yep, over the last year (we have a few days in January 2024 included in these numbers), Starbucks (SBUX) is off roughly 10%. And that’s okay with us, as we’ll explain in a second when we list the three main things we do to buy and hold winning stocks. We’re long-term investors. If we believe in a company, we actually like this level of downside. So, we’ll use Starbucks and our other top picks to illustrate our three main things. But first … of course, we also like when stocks we pick crush it and continue to crush it. Like Uber (UBER), up 126% over the last year. Like PulteGroup (PHM), up 110% over the last year. Like DoorDash (DASH), up 99% over the last year. Like Airbnb (ABNB), up 52% over the last year. Much of the same logic applies to these names as does to the one dog, Starbucks. Logic we wanted to share in response to an email we received a recent subscriber to The Juice: I’ve just become a member and look forward to testing the waters on your educational thoughts. As you know picking a stock to invest in has many parameters to go by to choose it for either long or short term. One of the main choices in choosing a company is their financials. Do they cash in the bank per say and next is their pooling and are they profitable. These are my main 3 to check off before investing in the company. Can you let me know what yours are? If not 3 then the main reason you choose one single company to invest in… Thx Drew Here’s what we look for, alongside how we like to invest. Because the latter is something to keep in mind as you search for stocks. Particularly if you’re a long-term investor, who’s doing well, but isn’t necessarily made of money. #1. Revenue Growth and a Path To Profitability We scoff at the stock market bean counters who use high P/E ratios or a lack of profits to rule out investing in a stock. Didn’t they learn after years of trashing Amazon.com (AMZN) for not turning a profit? Or, more recently, have they learned from Uber? Between 2020 and 2021, revenue grew by 56.7% at Uber. Between 2021 and 2022, by 82.6%. And by 23.8% between 2022 and 2023. Uber became a profitable company in Q2, 2023. You’ll find similar numbers at DASH and ABNB. At homebuilder, it’s a bit more tame with annual revenue growth between 11.7% and 26.2% over the last few years. Pretty similar numbers at Starbucks. We like to invest in growing businesses that, if not already profitable, have a clear path to profitability. #2 Is There A Strong Economic and/or Ecosystem-Related Long-Term Story? At the links above and in The Juice’s online archive, you’ll find our specific rationale around investing in SBUX, UBER, DASH, PHM and ABNB. But, generally, we want stocks that will benefit in the current and future economy. Consider PulteGroup. If anything’s certain in this uncertain housing market, it’s that we need more housing. So we’ve been and remain bullish on the builders because we think the housing market dynamics will play into their hands for a long time. With the other four names, it’s more about building multi-faceted consumer and business ecosystems the way Amazon did. The consumer segment touches consumers as many times as possible in the most important areas of their lives. Or, at least, in respect to things they do frequently. The business segment might be something like Amazon’s AWS (Amazon Web Services) or Uber and DoorDash’s solid early-inning opportunities with advertising. To this end, there needs to be a huge international opportunity. In the coming weeks, we’ll explore international expansion and growth as one reason why we still love DASH in particular. #3 Are They Good Dollar-Cost-Average Candidates? Using Airbnb, we explain how dollar cost averaging works here. We ask questions that help us measure our long-term conviction:
If we can answer yes to these questions, we’re good. Because we need time to build a sizable position in a stock. We’re not throwing $10,000 or $20,000 in each name all at once. Like many of us, we deal in smaller numbers. Each month, we’re spreading a few hundred to — in good months — a couple to a few thousand across our favorite investments. So they have to stand the test of time, which has a lot to do with the long-term narrative (#2), to make them appropriate for dollar cost averaging. The Bottom Line: This approach to buying stocks would have served you well over the last decade or two. While it’s impossible to predict if this strategy can stand the test of time, we obviously think it will. At day’s end, it just comes down to picking easy-to-understand companies doing cool things in growing or essential spaces, who are among, if not the leader in the respective spaces. |
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