The Price of a Dozen Eggs Is Up Big. Same for My 'Dandy Dozen' Stocks

The great thing about fast-rising stocks is that your portfolio balances now look fabulous (if you were fully invested to start the year). The bad news is that the easiest money has already been made. It is getting harder to find the kind of bargains that were available as recently as just a few months earlier. Another piece of unfavorable news is that inflation is far from cured. January price changes show that unless you were buying a television, used car or computer your cost of living went up substantially compared with January of 2022. Eggs are up 70%, butter by nearly 33%, fuel oil by nearly 28% and frozen vegetables by nearly 19%. All items as a group were 6.4% higher than a year ago. Keeping your money in T-bills, bank accounts or even money markets, at from fractions of a percent to about 4.5%, failed to keep pace with inflation even without figuring out their after-tax returns. Owning stocks is the best way I know that has proven to provide long-term rates of return, which protect and add to your true (after-tax and after inflation) buying power over time. Here is an update to my Dandy Dozen list of my top 12 personal dollar holdings when the year began. I am proud to say that 100% of my selections are up. The least impressive of those were Berry Global , which is up just 3.33% since Dec. 31, Designer Brands , which gained 8.80%, and United Natural Foods , with a respectable 9.71% year-to-date return. The two best were Generac , which surged on Wednesday, after reporting lower than last year, but higher than expected results, and Wolverine Worldwide with a 37.07% upturn. An equally weighted portfolio would have provided 16.67% gains plus dividends over this year's first six weeks. That compared quite favorably with all three major indexes. My stocks outperformed the lagging Dow Jones by more than 563%. It more than doubled what the S&P 500 earned. It even exceeded the Nasdaq Composite's high-flying 15.33% year-to-date result. I am eagerly awaiting AMWD's fiscal third quarter (ended Jan. 31, 2023) report as it is expected to show tremendous improvement over a depressed level during 2022. I believe that might just be the catalyst which turns the shares wildly positive. That is why is American Woodmark is currently my single largest holding. AMWD is expected to show north of $7 in fiscal 2022 EPS. When it earned $6.91 in Fiscal 2018 the stock peaked above $148. Caleres' management preannounced this week that the recently completed fiscal 2022 (ended Jan. 31, 2023) will likely come in at $4.35 or so, higher than ever before. Better still, they now see $4 per share as a sustainable baseline for future EPS vs. the five pre-Covid years, which saw profits run from $2.00 to $2.21 per share. CAL carved out an all-time peak of $41-plus during 2018 on final EPS of $2.21. At its Wednesday close of $26.65, CAL sold for less than 6.2-times trailing earnings. P/E expansion to just 10-times earnings could easily send it to $40 to $50. A more typical 13 multiple would send the shares into the $50 - $60 range. Ditto for Berry Global. Fiscal 2023, which ends Sept. 30, 2023, appears set for record adjusted EPS of about $7.65 - $7.75. A historically normalized fourteen multiple could easily send BERY to well over the $100 mark. I tend six separate accounts for my own money. Two are margin accounts that allow for the full spectrum of option strategies. That allows me to use leverage, which is unavailable in my four IRA accounts. As of Wednesday, these were my actual year-to-date results adjusted for all cash inflows and withdrawals. Leverage is hell during crappy markets like 2022. It is a wonderful thing, though, in rising markets. I am proudest of my success in my unlevered retirement accounts. All four of those are far ahead of all three major indices by wide margins. Reread my article titled Who wants to be a millionaire? 2023 Edition for more on that topic. That is a testament to the power of well-informed individual stock selection as opposed to simply buying index funds or ETFs. It also proves that the Law of Asymmetric Returns is always valid. Buying beaten-up shares after they have fallen dramatically is the best way to make outsized returns when the tide inevitably changes. Media talking heads love to tell you how a 50% return requires a 100% subsequent gain to get even. They rarely, if ever, recommend buying shares that are down by 50% that can then make you 100% gains just reverting to where they fell from. Markets never go up forever, nor do they sink permanently. Keep in mind ... every bear marker in America's history has been just a prelude to yet another all-time high.

The Price of a Dozen Eggs Is Up Big. Same for My 'Dandy Dozen' Stocks

How do you handle inflation? You make more money -- and I'll show you how with my stock list.

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