The final filter we use to select the potentially fastest growing domestic stocks is return on equity (ROE), a widely accepted measure of financial performance. In short, ROE measures how effectively a company has been using its assets to generate profits.
Need a better idea of what ROE looks like in action? Below is a chart. After using numerous other factors, we screen for return on equity. Recently, this has left us with three stocks in particular: Home Depot, biopharmaceutical company AbbVie and financial information and analytics firm S&P Global. Check out their performance for the three-year period through December 31, 2018!
Past performance does not guarantee future results. Source: Bloomberg, U.S. Global Investors
All three stocks beat the MEGAX benchmark, the S&P Composite 1500 Index. Home Depot was up 28.15 percent, AbbVie was up 47.22 percent and S&P Global was up an incredible 58.02 percent. The S&P 1500, by comparison, was up only 11.97 percent for the period.
And guess what? These three companies were among the top 10 holdings in MEGAX as of the end of 2018’s December quarter! Click here to see the fund’s composition, including industry breakdown.
MEGAX seeks to identify strong sectors and, within those sectors, identify companies that have the greatest potential for growth. The fund seeks long-term capital appreciation.
Its benchmark, the S&P 1500, allows us to pick stocks from as much as 90 percent of total U.S. market capitalization. What this means is that, unlike a typical S&P 500 Index fund, MEGAX can include more than just large-cap stocks but historically fast-growing small-cap and mid-cap stocks as well. Please note, small and mid-cap stocks have displayed more volatility than larger-cap stocks.
The fund was trading at an attractive 13.21 times earnings as of January 9, 2019. That’s quite a bit less than the market and the S&P 1500, which was trading at 17.64 times earnings.
Please fill out the form to request your free investment kit, including prospectus and application, by mail.