December 29, 2014
Revealed: The 5 'Missing' Forever Stocks
Apparently we've stirred a bit of controversy.
Since Dave Forest launched his brand-new version of StreetAuthority's most popular report a few weeks ago, "The 10 Best Stocks To Hold Forever," we've been receiving some great feedback.
But a few of our long-time StreetAuthority readers noticed something was different about this year's report.
Here's an email we recently received from one of our valued readers:
"I look forward to hearing why 50% of the 10 best stocks to hold forever, from earlier this year, did not make the cut. One half of the recommendations were deemed no longer appropriate for the 'Forever' stocks and I'm wondering why. Also, please let me know if this is normal or extraordinary."
This reader correctly pointed out that five out of our original list of 10 Forever Stocks are "missing" from our brand-new Forever Stocks report.
This is no mistake. Here's the full list of the five missing Forever Stocks he's referring to:
1. Reeves Utility Income (NYSE: UTG)
2. Alerian MLP Fund (NYSE: AMJ)
3. WisdomTree Emerging Markets (NYSE: DEM)
4. Markel (NYSE: MKL)
5. Intel (Nasdaq: INTC)
So what gives? After all, these long-term investments are called "Forever Stocks" for a reason. So why did five of them suddenly not "make the cut" this year as the reader asked?
As someone with a first-hand account of how this year's Forever Stocks research was done, I can tell you why. But first, it helps to know what went into our original group of Forever Stocks.
Before StreetAuthority Co-Founder Paul Tracy officially unveiled StreetAuthority's original "The 10 Best Stocks To Hold Forever" report back in July 2011, he and his research team set out to find the absolute best investments in the market.
Paul's key to find these Forever Stocks was simple. Find a handful of top companies that:
1. Enjoy huge (and lasting) advantages over the competition.
2. Reward investors each and every year by dishing out fat (and growing) dividends.
3. Buy back massive amounts of their own stock, boosting the value of shares.
After scouring through the more than 14,000 stocks traded on U.S. markets, he and his team found them.
And since Paul released the original list back in July 2011, his 10 Forever Stocks have been an investor's dream. As we reported recently, they've beaten the market by as much as 85 percentage points, increased their dividends up to 633%, and in some cases, have done so with less volatility than the market.
So why were five of these original Forever Stocks "cut"?
It certainly wasn't from poor performance. Just look at the chart below to see how our five missing Forever Stocks have performed compared to the S&P 500 from when we recommended them in July 2011 through today:
As you can see, four out of five of these Forever Stocks have either been on par with or have beaten the S&P 500 since we recommended them more than 40 months ago -- and this happened during one of the greatest bull markets in history. Any way you slice it, investors would have done well by following these recommendations (Try getting 60%-plus returns in your lifetime from a CD!).
And looking back, we weren't surprised that WisdomTree Emerging Markets (NYSE: DEM) failed to beat the market. As we mentioned back in May, emerging markets have been plagued by pessimism since 2009 and could very well be one of the last truly undervalued sectors out there right now.
So here's what happened...
Even though our original list of Forever Stocks have been a great success, this year Dave Forest and his research team decided to up the ante. So they built upon the original research by adding three new criteria to find the very best stocks out there.
During the research phase of the project, Dave and his team:
-- Looked for special companies that owned "Irreplaceable Assets" like dams, railroads, airports, commercial buildings and other properties that are invaluable to and can't be easily replicated by competitors. As Dave proves in his research, these investments have a history of outperforming the market over the long haul.
-- Created their own proprietary index of "The World's Greatest Businesses." The team created an index of Morningstar's top 100 companies with widest economic moats and then narrowed the list down even further to only include companies with the highest profit margins and Economic Value Added (or EVA, a little-known metric used by hedge funds) to weed out the worst-performing companies. The results were a select list of wide-moat businesses that crush the competition year after year.
-- Found companies that dish out increasing dividends and "tax-free dividends." History has shown that companies that pay dividends tend to beat those that don't. Knowing this, we looked for companies that not only had a long history of stable dividends, but also those that increased dividend payments each and every year.
The result is a brand-new, never-before-seen list of 10 Forever Stocks that have gained an average of 829% -- beating the S&P 500 by more than a 7-to-1 margin over the past decade.
So while the five "missing" Forever Stocks from the original list didn't make the cut this year, most of them have performed well and have a great chance of doing so for many years to come.
But we think our brand-new list will do even better. The work that Dave and his team have done this year to find The 10 Stocks To Hold For The Rest Of Your Life is unlike anything else you'll find from other financial sites. That's why if you're an investor looking to improve your success in the market, you owe it to yourself to watch Dave's presentation, where he recently told a live audience at St. Edward's University the details about this new breakthrough research. We hope you enjoy it.
Good investing,
StreetAuthority Daily
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