- The year 2023 saw a strong and consistent rebound in the stock market, thanks to a solid economy, better-than-expected corporate earnings, and an apparent end to the Federal Reserve’s interest rate hikes.
- From July 1 to December 31, the Everest Strategy registered a solid average gain of +19.4%, setting the consolidated performance for the whole of 2023 at an impressive average of +34.9%, compared to the +24.3% of the S&P500 index.
- This article reviews the 2023 performance, crunching numbers for the two most popular Everest Strategies: the 3-stock strategy and the 10-stock strategy. Furthermore, we are going to analyze the best stocks that the Formula discovered in the second half of 2023.
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Performance over the last six months
In the second half of 2022, the Everest Formula 3-stock strategy had a performance of +19.5%, turning a hypothetical portfolio of $10,000 invested on July 1, 2023, into $11,946 on January 1, 2024. The 10-stock Everest Formula strategy follows closely, registering a gain of +19.3% and turning the same amount into $11,933. In the same period, the S&P500 index registered a performance of +7.2%, a solid performance, but which even for this semester lags behind the results of the Everest Formula.
Even if the performance of the Everest Formula is strong and steady, we need to outline that the volatility and drawdowns that it brings to investors are significantly higher than an index, like the S&P500. As we highlighted many times, any strategy that uses only a few stocks (like the Everest Formula) has a remarkable volatility, that can worry less risk-tolerant investors. For this reason, we suggest applying our strategy to the risky part of your overall portfolio, the one that aims towards greater profits.
2023 consolidated performance
Totaling up together the performance of the two semesters of 2023, the Everest Formula 3-stock strategy returned to its investors a gain of +41.8%, transforming a hypothetical portfolio of 10,000$ at the beginning of 2023 into 14,177$ at the end of 2023. The Everest Formula 10-stock strategy instead registered a gain of +28.1%, transforming the same amount into 12,810$. Over the same period, the S&P500 had a strong bull run and registered a gain of +24.3%, but significantly lower than the Everest Formula.
The Everest Formula continues year after year to confirm the exceptional value that brings to investors who decide to get the opportunity to apply the strategy. Over the last 23 years, Everest Formula’s strategies had an average compound annual growth rate of 29.3%, and last year the performance was even better.
Everest Top Picks
Most of the stocks that the Everest Formula chose in 2023 have had a significant increase in their price, but some of them performed exceptionally well. We are going to review those and evaluate whether they are still a bargain to buy now.
BCC – Boise Cascade L.L.C.
Boise Cascade Company operates in the wood products industry, supplying materials for residential, commercial, and industrial construction. The company’s portfolio includes engineered wood products, plywood, particleboard, and other building materials.
The stock entered the 4th position of the Everest Rank at the end of July, and never left the top 10 because the company’s fundamentals and profit growth are improving together with its price increase. Initially the stock had a temporary correction, because the market interpreted the most recent report as negative, contrary to the Everest Formula. Since October, however, the market corrected itself and the stock has exploded, registering nearly 50% in just over two months.
BCC’s current outlook: BCC is still a good buy, being still in the top 10, at position 7. Although the price has increased a lot recently, the valuation metrics are still very good, with a P/E of 10, a stable and consistent free cash flow, and an amazing balance sheet. The management is strong, and has grown ROIC from 8.8% in 2019 to 42.5% in the TTM period.
PBF – PBF Energy Inc.
With a $4.9 billion market cap, PBF Energy is a major independent petroleum refiner in the United States, with a focus on supplying unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants, and other petroleum products. Operating in the U.S. and international markets, the company owns and manages six domestic oil refineries with a total processing capacity of approximately 1 million barrels per day.
PBF entered in the 2nd position of the Everest rank in December 2022, when after a year beyond expectations for the energy sector, the market was convinced of a general decline in energy prices and related stocks. The decline actually took place, but not as expected, and especially not in PBF’s profits, which therefore maintained and increased its capitalization in 2023. Everest Formula investors made about 23% from the trade of this stock.
PBF’s current outlook: The stock exited the rank in November 2023, as the latest report revealed a deterioration in the company’s profitability. PBF could still be considered a good buy. However, given the uncertainty in the industry and the profitability and valuation that are no longer at the excellent levels of last year, there are better stocks to invest in.
UFPI – Ufp Industries Inc
UFPI is a U.S.-based manufacturing company that operates a balanced business model through three main subsidiaries within the construction and industrial sector:
- UFPC, that supplies homebuilders with site-built and factory-built homes.
- UFPR, a value-added manufacturer, seller, and self-distributor that provides solutions to DIY consumers and professional contractors.
- UFPP, a leading U.S. provider of industrial packaging.
The stock entered the top 10 in July 2023, after a solid earning report that showed a significant free cash flow compared to the capitalization of the stock. Again, the market took some time to properly value the stock, and currently UFPI has allowed a gain of about 22% for the investor who followed the Everest strategy.
UFPI’s current outlook: UFPI is still a bargain. An acceleration in homebuilding activities combined with increased spending on public infrastructure provides long-term tailwinds to the core end markets of UFPI. Combined with the cyclicality and high fragmentation of UFPI’s three core markets, we expect these structural advantages to result in a long runway for profitable growth and high returns on capital. The stock is a perfect mix of good profitability, low debt, excellent management, and cheap valuation metrics, supported by solid earnings and growing cash flow. UFPI is currently in the 8th position of the Everest rank.
The Bottom Line
The Everest Formula has discovered outstanding companies in 2023, reaching performance that even goes beyond the average annual 30% that has been accomplished over the last 23 years. We don’t know whether the Everest Formula will continue to beat itself year after year, but we firmly believe that selecting good businesses at a bargain price will always be a good investment strategy.
If you want to find the best profitable and undervalued stocks in the market, join us now.
