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Analyzing the Barron’s 2016 Top 10 Stock Picks
Posted on December 9, 2015 by Andy Hayes

We always look forward to seeing what’s on the annual Barron’s “Top 10 Stock Picks” each year.  Right on time, the 2016 stock picks have been announced – you can see them all here.

barron's top 10 2016I went into my free SFTW investor account and created a watchlist to review more data about these stocks.  

Trending Sector: Services

One of the most prominent pieces of information in the watchlist view is the composition chart, which reflects how diversified the stocks are across sectors.  The big sector in this year’s Top 10 is Services, which represents 40% of the collection (AMCX, CVS, DAL, FL). Despite being a majority, the selection from airplanes to pharmacies highlights a bit of diversity, perhaps crucial considering Barron’s themselves just reported the service sector is slowing.   

SFTW Investor rates sectors with a sector safety score, similar to the score we give for individual stocks. Services has an average safety score of 48, which is in line with the scores of many other sectors in our system (examples: Consumer Goods: 46, Financial: 49, Healthcare: 47).  The only sector that trends higher is the Technology sector, with an average score of 60.

If you’re curious about more investments in the Services sector, SFTW Investor also highlights the top 5 industries (and the top 3 stocks in each industry) you might want to consider.  DAL and its sector, Major Airlines, makes the top 5.

service sector safety score

Safety Scores

We’ve talked about sector safety scores, but what’s interesting is the strength of the individual stock safety scores in the 2016 Barton’s Top 10.  The average of the entire list is 81 – which means that our algorithms believe this group of stocks has a strong potential for long-term growth in value.

DAL leads the least with a score of 98, followed right behind with AMCX, APPL, and FL all with scores in the 90s.  In fact, all of the stocks in the top 10 have a score above 50 with the exception of DFS with a safety score of 48.

If you’re interested in additional stock recommendations with high individual safety scores, be sure to take a look at the Top Undervalued page in the Investor app under Recommendations.  It contains the top 30 stocks in our database that have a high safety score, but are currently priced lower than we we estimate their actual value to be.

Past Performance

As with all things in personal finance, past performance does not necessarily predict future potential.  Barron’s 2015 picks lost 6% on average, versus 2% of the S&P 500 index – similar to the “MPI Performance” factor in our SFTW Investor application, Barrons also provides transparency into how their past picks have performed.

In SFTW Investor, we also surface timing signals to provide buy/sell suggestions.  A good example for this is Macy’s (M), which was in Barron’s 2015 picks and has had a fairly steep drop in price over the past year – but our Investor application issued a sell recommendation in August, which would have helped an investor avoid the biggest part of the drop.

macy-chart

What stocks are you excited about in 2016?
Create your SFTW Investor watchlist so you can track your picks!

Note:  All scores and ratings are as of December 8th 2016 and can change on a daily basis.

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Written by Andy Hayes

is a lifestyle expert and runs his own online magazine, Plum Deluxe. Andy is based in Portland, Oregon.

 
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