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ACADIA Pharmaceuticals, Inc.
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China Distance Education Holdings
China Mobile Games and Entertainment
B Communications Ltd
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Puma Biotechnology, Inc.
Xerium Technologies Inc.
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BioCryst Pharmaceuticals, Inc.
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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:
Ticker Name Industry Gain in 2013 YTD gain Mkt cap
If I bought or held the best stocks of 2013 also into 2014, my YTD return would be around -4.3%, which is lower than the S&P 500s 6.7% return. As you can see, 18 of the original 30 stocks went down this year, and 2 were bought out in acquisitions. So far it looks like buying the best stocks of the previous year is not a great idea, will see how they do for the rest of 2014. However, momentum investing (buying stocks at new highs) still works, provided you buy good undervalued growth stocks and use proper risk management.
Continuing with UK stocks, I checked the best performing ones in 2014 with a minimum market cap of 100 million GBP. The FTSE 100 index is up only 1% this year, but there are still many great stocks out there:
Ticker Name Sector YTD Gain Market cap Profit Insider
Best UK stocks look a bit different than their US counterparts. Only 7 companies didn't turn a profit and only 10 were bought by insiders prior to their advance. I have picked 2 stocks on this list, namely Hutchison China Med and Hikma Pharmaceuticals, which have done quite well.
But one thing holds true again: The best stocks are almost always small caps, that are growing fast or coming up with a new product/service. And of course, they all make new highs regularly. If you want to make money in the stock market, focus on uptrending small cap stocks, you can definitely catch some multibaggers there.
I have decided to check the best stocks of 2014 so far, to see what I have missed this year. The minimum market cap criterion was $300 million, I also examined if they turned a profit or were bought by insiders prior to the big moves. Here are the best 30 stocks of 2014:
Ticker Name Sector YTD Gain (%) Market cap (mil.) Profit Insider
As you can see, 24 out of 30 top stocks (80%) didn't make any profit last year and most of them don't pay any dividend. So much for P/E ratios and dividend valuation models. In addition, 17 stocks (56%) were bought by insiders before their advance began. The most dominant sector was healthcare (or biotechnology) with 16 stocks, followed by basic materials (7).
However, there is one thing that all best stocks had in common: they kept making 52-week highs over and over during their big moves (simple, isn't it?), and some had huge increases in sales which justified the skyrocketing prices.
To make money in stocks you must have the "the vision to see them, the courage to buy them and the patience to hold them". And patience is the rarest of the three. Thomas Phelps