Investment clubs ended 2011 and began 2012 by adding to their positions in a number of large-cap stocks. Apple (AAPL) and Ford (F) led the way in terms of buy transactions over the eight weeks ended Jan. 9, as reported by the myICLUB.com club accounting service. But they seemed to be more enamored with Caterpillar (CAT), a longtime favorite of the BetterInvesting community that recently reported strong quarterly results.
Clubs bought twice as much CAT as they sold during the period, which indicates club members believe the stock will offer above-average returns over the next five years. Looking at judgments made by users of BetterInvesting’s Online Stock Selection Guide, we can see that they’re expecting sales growth of about 10 percent for the next five years and earnings growth between 10 percent and 15 percent. For a company of Caterpillar’s size, these are certainly suitable rates for those interested in growth stocks. Whether you believe CAT is a buy right now is another question; many of the Online SSG studies resulted in returns that were less impressive.
I like to look at club transactions with at least a 2:1 ratio of buys to sells to determine where the BetterInvesting community is looking for opportunities. Other stocks meeting this criterion over eight-week period were:
* Intel (INTC)
* Corning (GLW)
* Abbott Labs (ABT)
* Coca-Cola (KO)
* LKQ Corp. (LKQX)
* Visa (V)
* IBM (IBM)
* Green Mountain Coffee Roasters (GMCR)
* Cognizant Technology Solutions (CTSH)
Most of these companies are well-known to the investing community, but LKQ, which provides auto parts for collision repair, is the type of company that BetterInvesting members seem to unearth every year. The company might not be in a “hot” industry such as smartphones or other mobile devices, but in growing sales and earnings in the 30 percent range over the past five years, LKQ has been recognized by our community of independent-minded, long-term investors for the bang-up job it has been doing.