In December of 2013, I looked at the 30 best stocks of the year to see what they had in common. I was pretty curious how they have done since the start of the year, because I am an advocate of momentum investing. The results don't look good, their performance as a group has lagged the index for in 2014:

I have compiled the list of best Indian stocks of 2013. The minimum criterion was a market cap of 1500 Rs. Cr. (250 mil. USD), I also examined if the companies generated a profit or if the stock was bought by insiders.

Ticker             Name                                                      Industry                                  Market cap                 YTD gain    Profit       Insider

The best stock on the list was Kappac Pharma (506938) with a gain of 5000%, while the worst one, Tata Steel (500470) advanced by 110%, which is still great given the SENSEX index returned just 8%. The most represented sector was Biotechnology (4 stocks), followed by Automotive (3), Financial Services (3) and Technology (3). The summary is below:

- All of these stocks made multiple 52-week highs during their advance
- 83% (25) of the stocks are small caps with the market cap below 1 billion USD. The exceptions are Aurobindo Pharma (524804), Reliance Communications (532712), JustDial (535648), JSW Steel (500228), Tata Steel (500470).
- 80% (24) of the companies show a profit
- 53% (16) do not pay any dividend
- 43% (13) have been bought by insider before they made big gains


The best Indian stocks of 2013 have a bit different characteristics than their US counterparts. The majority make a profit and there are also some large cap winners. What they have in common is that most of the top stocks do not pay a dividend and are generally not bought by insiders prior to their advance.  Check out the best Indian stocks to buy now.

Continuing with my examination of the most profitable stocks of 2013 around the world, find below the UK list:

Ticker             Name                                                 Industry                                    Mkt. cap     YTD gain    Profit      Insider  Breakout

The yearly gains of the best UK stocks range from 137% (MGR) to 585% (ABTX), what is less than half of it's US counterparts. This can be attributed to the significant outperformance of US stocks during the last year, which returned around 25% compared to the 8% return of FTSE100. Nevertheless, there were some big gainers, especially among computer and internet stocks - BLUR, SEE, XAR, BLNX, GBO, WAND, KBC. In fact Blinkx (BLNX) is in my portfolio right now, as I still see a lot of upside potential in that stock. Doing the same research as for US stocks, I have come up with these results:

- All of the best stocks had a market cap of 800 million GBP or lower, before their advance
- Every single stock from the list reached new 52-week highs multiple times during the last year
- 70% (21) paid no dividend during the last year
- 66% (20) still have an institutional ownership of 80% or lower right now
- 56% (17) experienced sharp breakouts on significant volume, which started each uptrend 
- 50% (15) were bought by insiders before the biggest moves began
- 40% of companies were not profitable
- Of the best 5 UK stocks of 2013, only two were profitable, one was bought by insiders and all had broken out of their bases on strong volume before scoring large gains

Comparing these results to the US list, we can conclude so far that: 
1. The best stocks are usually small caps, with market cap under 1 billion USD
2. The majority do not pay dividends
3. Institutional ownership is very low
4. More often than not, these stocks experience sharp breakouts to the upside, which start their advance
5. Top 5 stocks are generally profitable and are not bought by insiders

Again the common trait that all these stocks share is the reaching of new highs many times during their advance. It looks as the UK stocks are less speculative, given that 60% of them earned a profit during the past year compared to only 36% in US. Buying into an uptrend works in UK just like in the US, many of these stocks are still trading at or near their 52-week highs now. I will follow up with similar lists for Hong Kong and Indian stocks to see if the same patterns emerge. Meanwhile, check out the best UK stocks to buy now.

This year is soon behind us, so it's time to take a look at the biggest winners of 2013 until now:

Ticker           Name                                                      Industry                              Mkt. cap    YTD gain      Profit       Insider   Breakout

Gains for the best stocks of 2013 range from 345% (PSIX) to 1162% (AAMC), AAMC being the only stock I owned during the year, although I sold it too early and didn't realize the full gain. The company is the real estate asset management arm of Altisouce Portfolio Solutions (ASPS), from which it was spun off during 2013. The list of industries is quite diverse, although 9 stocks (30%) come from the biotechnology sector (PTCT, LCI, INSY, ACAD, CHTP, GENT, KERX, PBYI, BCRX) and 8 (26%) from broadcasting and communications services (ZHNE, GSAT, GTN, IQNT, MEG, NXST, BCOM, ROAI). I have checked insider buying, breakouts, profits and market cap of all stocks before their advances, and the results are summarized here:

- All stocks had a market cap lower than 1 billion USD before advancing higher
- Each stock has reached 52-week highs many times during it's uptrend
- 86% (26) of them still have an institutional ownership lower than 80% right now
- 86% (26) of all stocks have a short float of 10% or below right now
- 77% (23) did not pay any dividends during the year
- 70% (21)  experienced a major breakout on significant volume, which started their whole move
- 63% (19) have no earnings and are losing businesses
- only 30% (9) have been bought by insiders before exploding higher
- The best 5 stocks of 2013 all had major breakouts, neither was bought by insiders before it, and only one was showing a profit

Buying the best stocks right now on breakouts or after major news can be very profitable. However, I believe that none of these stocks could be discovered by fundamental or technical analysis alone, you need to combine both approaches to dig deeper and analyze their potential. Most of them are not profitable now and won't be for some years, so any valuation might be very imprecise. On the other hand there are many stocks breaking out on strong volume every day, which means some kind of fundamental analysis is required to weed out future losers and capture the multibaggers. I will soon compile similar lists of the best UK, Hong Kong, and Indian stocks of 2013 and compare the results so stay tuned.
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