# What is your favourite US growth stocks?



## MrBlackhill (Jun 10, 2020)

Same as this thread : What is your favourite CDN growth stocks?

But US or USD stocks.


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## MrBlackhill (Jun 10, 2020)

I should start by naming at least a few on my watch list. These are non-tech and decent P/S.


ROST : A strong performer through multiple decades
UNH : A strong performer in the last decade
CTAS : A strong performer in the last decade


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## MrBlackhill (Jun 10, 2020)

One more : CHTR


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## Pluto (Sep 12, 2013)

that's a good start. I'll start a portfolio.


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## MrBlackhill (Jun 10, 2020)

A few more :

EXPO
POOL
WST
IDXX
ORLY
CHE
ODFL


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## Pluto (Sep 12, 2013)

Should I back date these or start them on the date they are posted?


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## MrBlackhill (Jun 10, 2020)

I'm just posting stocks I'm finding at the moment, it's not an exhaustive list, but you can do as you wish if you'd like to start a portfolio with these. You can also post your picks. I haven't done a deep analysis on them, just a first screening.


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## kcowan (Jul 1, 2010)

I suggest using the same start date as the CDN portfolio for comparison.
Add AAPL, CSCO, and XOM
You might want to add the growth stocks: Alphabet, Facebook, Amazon


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## james4beach (Nov 15, 2012)

The thread says USD, so are we listing stocks which trade in USD, or do you specifically mean American stocks?

I would say add TSM which is a Taiwanese company that trades in the US as an ADR.


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## MrBlackhill (Jun 10, 2020)

Sorry, fixed the title to US but it can be anything traded in USD also.


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> I'm just posting stocks I'm finding at the moment, it's not an exhaustive list, but you can do as you wish if you'd like to start a portfolio with these. You can also post your picks. I haven't done a deep analysis on them, just a first screening.


OK. Analysis is not necessary. With the CDN one we just added what ever popped into our heads. that way we avoid analysis paralysis and then jsut see what happens.


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## Pluto (Sep 12, 2013)

kcowan said:


> I suggest using the same start date as the CDN portfolio for comparison.
> Add AAPL, CSCO, and XOM
> You might want to add the growth stocks: Alphabet, Facebook, Amazon


OK, will do.


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## Pluto (Sep 12, 2013)




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## Pluto (Sep 12, 2013)




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## MrBlackhill (Jun 10, 2020)

What application do you use?


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> What application do you use?


It is part of a subscription to online globe and mail paper. It is the "portfolio" feature under the "investor" online page. it has proven to be very informative and educational for me.


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## MrBlackhill (Jun 10, 2020)

Here's a few more that I may pick for the US part of my portfolio.


TYL
_NFLX_
*DPZ*
LULU
SPGI
*AWK*
ROP


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## Pluto (Sep 12, 2013)




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## kcowan (Jul 1, 2010)

I am pleased to see that my two holdings are among the 9 above average.


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## Pluto (Sep 12, 2013)

^ Yep, you are doing good. Nothing like growing stock in a portfolio to make the future look brighter.


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## Pluto (Sep 12, 2013)

Updated portfolio:


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## Pluto (Sep 12, 2013)

Maximum drawdown is really decent.


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## Pluto (Sep 12, 2013)




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## Pluto (Sep 12, 2013)

I don't know a whole lot about the ratios in the above post, but apparently they are all good.


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## MrBlackhill (Jun 10, 2020)

Pluto said:


> I don't know a whole lot about the ratios in the above post, but apparently they are all good.


They are basically risk-return ratios. To simplify, Sharpe's ratio divides the CAGR by the volatility. So 5% CAGR with 5% volatility will have the same Sharpe ratio than 10% CAGR with 10% volatility. If you have 5% CAGR with 10% volatility then it's worse, if you have 10% CAGR with 5% volatility then it's better.

Sortino is about the same as Sharpe but it's using only the downside volatility because who cares about the upside volatility, unless you are bearish?

The higher the Sharpe, the Sortino ratio, the better.

I use them a lot, I like them. I didn't know about Roy's but it's just a slight modification to Sharpe's and I like it. Sharpe & Sortino ratios subtract the risk-free rate from the CAGR before dividing by the volatility. Roy's subtract the investor's minimum required return. That way, a 5% CAGR 5% volatility stock will not be considered as good as a 10% CAGR 10% volatility stock if your minimum required return is 5%, as opposed to using a risk-free rate of 0.25%...


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## MrMatt (Dec 21, 2011)

Easily Amazon, they'll keep growing until anti-trust breaks them down.
They own almost the entire supply chain from the factory loading dock, to the customer, including all the infrastructure.
Physical goods they can't be matched.

Their scale gives them insane profitability in AWS.
Backblaze competes with S3 storage at 1/4 or less of the price. Think about that, profitable competitors charge 1/4 the price and Amazon is still growing. 

Kindle/Print on Demand, many writers simply publish to Amazon, you get a huge market really fast, many don't even bother with the other platforms.

When antitrust comes for Amazon it will be a problem, but until then I imagine massive growth.


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> They are basically risk-return ratios. To simplify, Sharpe's ratio divides the CAGR by the volatility. So 5% CAGR with 5% volatility will have the same Sharpe ratio than 10% CAGR with 10% volatility. If you have 5% CAGR with 10% volatility then it's worse, if you have 10% CAGR with 5% volatility then it's better.
> 
> Sortino is about the same as Sharpe but it's using only the downside volatility because who cares about the upside volatility, unless you are bearish?
> 
> ...


That's interesting. I presume that if one's ratios are higher than the index one can expect better performance. If that's true one could remove stocks from the portfolio that reduce the ratios, and add stocks that improve the ratios. then one should be fine.


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## m3s (Apr 3, 2010)

MrMatt said:


> Easily Amazon, they'll keep growing until anti-trust breaks them down.


Yup. No competition

I thought LULU was Cdn but it's not on the TSE?

Add TSLA and AMD


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## MrBlackhill (Jun 10, 2020)

Pluto said:


> That's interesting. I presume that if one's ratios are higher than the index one can expect better performance.


Not necessarily, I higher ratio means a better stability relative to its growth. For example, here, portfolio 1 has the best Sharpe ratio (1.42), while portfolio 2 comes second with a Sharpe ratio of 1.05 and portfolio 3 comes last with a Sharpe ratio of 0.88. But portfolio 3 has a better Sortino ratio than portfolio 2 because the biggest part of its volatility is on the upside.


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## Pluto (Sep 12, 2013)

^
Ahhh. OK, I get it.


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## Pluto (Sep 12, 2013)

Here is a update of US growth pics:


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## Pluto (Sep 12, 2013)

^
Obviously we have missed our calling and ought to be running a hedge fund. We would be successful as long as we were golfing most of the time in stead of fiddling with the portfolio.


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## MrBlackhill (Jun 10, 2020)

I want to start a portfolio with all of the stocks I mentioned here.

Most of them have a history of more than 20 years of steady 20%+ CAGR.

I'm not sure if that will last another 20 years but their fundamentals and technicals are still pretty strong.


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## Pluto (Sep 12, 2013)

One thing I avoided in this project is diversification by industry. I don't place a lot of value in that concept.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> They are basically risk-return ratios.
> . . .
> Sortino is about the same as Sharpe but it's using only the downside volatility because who cares about the upside volatility, unless you are bearish?
> 
> The higher the Sharpe, the Sortino ratio, the better.


I like the Sortino ratio. I think it's one of the easiest measures of risk-adjusted return, and it has the big improvement of only counting down-movement as volatility. Spikes of volatility upwards are not perceived by humans as "risk".

And yeah, these are amazing stocks.

However, there's a hindsight bias problem here. It's easy to see which stocks were great once they already proved they were great. So this is entirely artificial. We did not identify these stocks X years ago. The real question is how it does going forward after you identify the stock, and how you manage the portfolio.

Hindsight bias is a real nuisance in stock games. Sometimes it's hard to see it, and it often fools people into thinking that stocks are much easier than they really are.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> I like the Sortino ratio. I think it's one of the easiest measures of risk-adjusted return, and it has the big improvement of only counting down-movement as volatility. Spikes of volatility upwards are not perceived by humans as "risk".


I totally agree, it's my top statistical indicator. (My true best would be a combination of Sortino Ratio and Roy's Safety-First Ratio and an average on a Rolling Window so I could input my minimum required instead of Sortino's risk-free rate and also see the average on a predefined rolling window).



james4beach said:


> However, there's a hindsight bias problem here. It's easy to see which stocks were great once they already proved they were great. So this is entirely artificial. We did not identify these stocks X years ago. The real question is how it does going forward after you identify the stock, and how you manage the portfolio.
> 
> Hindsight bias is a real nuisance in stock games. Sometimes it's hard to see it, and it often fools people into thinking that stocks are much easier than they really are.


That's why I selected most stocks with a history of 20+ years of great returns.

How long has a trend to be so we stop calling it a hindsight bias? I mean, 30 years in the future from now, if we see stocks with 50 years of great returns, will we call that a hindsight bias? It's more about the Gambler's fallacy, but yet that bias is about random events of the past, while the continuous success of a stock is not random. There's a part of luck due to uncontrollable events, but it's not all random.

With a stock doing awesomely good for 20 years, you could have seen that trend 5 years or even 10 years ago. That's why I ask how long has a trend to be so we don't call it hindsight? A 50-year trend could've been spotted after 10, 15, 20, 30, 40 years. Maybe even after only 5 years? Where's the threshold?

To me, the hindsight bias is when you think you could've picked 20-year trend after only 5 years. That means, no, I don't believe I would've been able to correctly identify that current 20-year trend back in 2005 after only 5 years. But in 2010, after 10 years, I think yes.


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## MrBlackhill (Jun 10, 2020)

This is how I position myself to reduce the hindsight bias.

Let's take EXPO for example, with a 30-year history. To simplify the example, we'll just assume all fundamentals are equal and we're just looking at the trend.

EXPO bottomed in 1995. Would I have picked it at that moment? Definitely not, it had 5 years of history which was crashing hard.
Would I have picked it in 2000? Certainly not, it just had a 5-year upward trend of 10% CAGR but that's after a 5-year crash. I wouldn't have been confident.
Would I have picked it in 2005? It did great during the 2000 crash, but it's still only a 13% CAGR after 10 years.
Would I have picked it in 2010? Well, it now has 15 years of stability at 19% CAGR, with 24% CAGR in the past 10 years and 15% CAGR in the past 5 years and it managed the 2000 and the 2008 crashes pretty well.

So, yes, I believe I would've picked EXPO in 2010.
If not, would I have picked it in 2015? Yes, as the trend was still good.

Now, obviously, this is simplified using only the trend. I would look at the fundamentals to see if it's still a good pick even if the trend is super strong and stable. After all, GE had a super strong and stable trend for 15 years from 1985 to 2000. Someone who picked GE in 1998 definitely didn't get what he expected from 1998-2007 (only 6% CAGR) and even worse after the 2008 crash (1998-2012 is a 15-year period with only 1.77% CAGR). That's where we learn the unfortunate and uncontrollable events of crash did affect GE very badly. But that's also why we diversify and we don't put all of our money in a single stock that seems so stable and high growth.


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## james4beach (Nov 15, 2012)

These are interesting philosophical questions @MrBlackhill and I don't know the right answer. But the stock market is a very tricky place.

I know countless examples, stocks which WERE very popular, and had very long track records, before becoming total failures. Their stats made them look attractive in the past. Some immediate ones I recall are Citigroup, GE, Bombardier, SNC Lavalin, XOM, Suncor.

Hindsight bias is insidious because it creeps into the analysis in ways you don't immediately see. Today, the common wisdom is "the energy sector is too damn volatile and isn't a good investment". Oh ok, gosh, well I guess that's very clear... so obvious! You hear it at CMF all the time.

But in 2006, people didn't do that kind of analysis. Suncor and XOM had absolutely amazing returns, and an amazing Sortino ratio, and there was no reason to avoid them. The current practice of excluding them is hindsight bias ... it's not reflective of how stock selection worked back in 2006.

That's why this stock picking business is so difficult. It's very very difficult to simulate the "way the world looked" in a previous year.

The proof is in real results from real portfolio management. It ALWAYS looks easier when you do these paper games, versus doing it in practice. We can look at real mutual funds and hedge funds. You've seen the stats I'm sure -- *most don't do that well in the long term*. I know you are seeing results here and thinking this is all pretty easy, but please, look at statistics of portfolio managers and hedge funds.

The effects I talk about (hindsight and survivorship bias) are very significant in reality.


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> I know countless examples, stocks which WERE very popular, and had very long track records, before becoming total failures. Their stats made them look attractive in the past. Some immediate ones I recall are Citigroup, GE, Bombardier, SNC Lavalin, XOM, Suncor.


I agree.

You'll be interested by my new thread about the Safest stocks

I think the safest stocks are the Big 6 Canadian Banks.


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## :) lonewolf (Feb 9, 2020)

tqqq, jks, gdlc & AGQ are my favorite price pattern stocks I am holding all of them till price pattern says other wise. Yesterday Tqq was up 4.45%, jks was up 14.43%, Gdlc was up 6.33% & AGQ was up 11.06% Looks like they should keep trending higher till sometime in 2021


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## Pluto (Sep 12, 2013)




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## Pluto (Sep 12, 2013)

^

OOPS


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## Pluto (Sep 12, 2013)




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