- The first half of 2023 saw a remarkable recovery in the markets, and with them the Everest Formula returned strongly to positive territory.
- The 3-stock strategy outperformed the market, registering a +16.6% return compared to the +14.6% recorded by the S&P500 index. The 10-stock strategy, after consistently beating the index in 2022, gives way slightly while still registering a solid +6.6% return.
- In this article, we will comment on this semester’s performance and analyze the best stocks discovered by the Everest Formula.
Performance over the past six months
In the first half of 2023, the Everest Formula 3-stock strategy had a performance of +16.6%, turning a hypothetical portfolio of $10,000 invested on January 1 into $11,656 on June 30. The Everest 10-stock strategy had a slightly lower but positive return, registering a +6.6% performance and turning the same amount into $10,659.
Thus, the 3-stock strategy has returned to outperform the S&P500 index, despite its extraordinary performance in this first half of the year (+14.6%). How, on the other hand, did the 10-stock strategy lag behind the index? The reasons are the same as why the strategy did very well in 2022: Indeed, even in this first half of the year, the top 10 positions had a substantial number of energy stocks, which after an extraordinary 2022 have pulled back a bit in the last period. In addition, the 10-stock strategy brings lower volatility for lower average gains and is better suited for more risk-averse investors.
In fact, if we go to look at the performance since the beginning of the bear market, we notice that the 10-stock strategy still turns out to be the most profitable investment:
As repeatedly reported, we must always look at the medium/long term to appreciate the benefits of the Everest Formula, which in the single six-month period may have returns in line with the market but proves to be a winning strategy in the long run. As a matter of fact, the following chart reports the performance of the Everest strategies since the end of the training phase of the algorithm, that is, since the beginning of the operational phase started in October 2020:
The Everest Formula is not a way to make “easy and quick money” but is an effective tool for value investors who want to grow their wealth over time.
The best companies selected by Everest Formula
This semester Everest Formula brought in some excellent companies in its top 10 that are worth analyzing to see if they are still good buys.
Builders FirstSource Inc – BLDR
Builders FirstSource, Inc. has been manufacturing and supplying building materials, fabricated components, and construction services to professional home builders, subcontractors, remodelers, and consumers in the United States since 1998.
We had previously reported this excellent company as one of the best bargains for 2023, and it turned out to be so. BLDR has more than doubled its share price since entering the Everest Formula Top 10 in mid-November. The company, quoting the article, showed itself as “a fast-growing company with excellent profitability, good operating margins and low debt. Characteristics that combine with a failing company valuation.” Not long after the market realized this, it sent BLDR’s valuation skyrocketing.
BLDR’s Current Outlook: Builders FirstSource dropped out of the top 10 in March 2023 due to the sharp appreciation of its shares, which made the stock less attractive from the perspective of value investors. However, the stock continues to perform exceptionally well and appears unstoppable. Everest Analyzer now rates it with a B score on quality and an A on valuation. So it is still a good company to have in your portfolio, even if it is no longer the bargain it was at the beginning of the year.
Mueller Industries Inc. – MLI
Mueller Industries, Inc. is a basic industrial manufacturer. It manufactures and sells copper, brass, aluminum, and plastic products in the United States and internationally. It operates through three segments: Piping Systems, Industrial Metals, and Climate.
The company has experienced massive growth in its segments since 2020, managing to quintuple its profits in the last three years. Despite this, the market has been slow to recognize the company’s actual value due to a complicated and pessimistic macroeconomic situation, which led to the company being placed by Everest Formula in the top 10 as of February 2023. Since then, the stock has posted an excellent +20.6% in just four months.
Current Outlook for MLI: Mueller Industries is still in the top 10 of the Everest Formula, at position 5, and is still one of the best stocks we like to have in this recovering market. It is a stock that can have further room for growth in an economic recovery, thanks to its astounding balance sheet and very high profitability.
Conclusions
After a difficult 2022 for the markets, we have seen a definite upswing in all the major indices and the Everest Formula strategies, which posted solid gains in 2023. We don’t know if the Everest Formula will continue to beat the market half-year after half-year. Still, we firmly believe that selecting good companies at a bargain price will always be a good investment strategy.
If you want to find the best quality and undervalued companies in the market, join us now.
