Way Undervalued
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These Way Undervalued companies from 3 years ago gained 340%

I recently compared performance of several Way Undervalued companies from June 2013.  I found something interesting.  Many of my favorite companies from 2013 returned an average of 340% over the past 3 years.  By comparison, in the same time period the S&P 500 has returned 42% over the 3-year period.

You can read my original article from June 2013 about several of my picks that averaged 135% return after the first year.  Well after 3 years, those companies have performed even better to say the least.  A couple of the companies (Broadcom and RF Micro Devices) have since merged into new companies, AVGO and QRVO.  I've adjusted the 2013 price to account for the mergers. 

Let's get right to it...

Airlines were by far the biggest gainers.  American Airlines (AAL) returned 1,097% from June 21st, 2013 to December 19th, 2016.  No that's not a typo.  Almost 1100%.  It skyrocketed from $4.06 to $48.58 today.  Some call that a "ten-banger".  Just to make sure, I checked to see how many other large cap companies beat this return over the past 3 years.  There were none.  Nada.  Zilch.  AAL has outperformed every other large cap out there over the past 3 years. 

AAL was trading in the mid-$50's back in 2015, so the folks that sold at that peak did even better.  However, I don't recommend selling AAL just yet as it is STILL Way Undervalued (believe it or not).

AAL even outperformed the return of the 2 best growth companies over that time period, Netflix (NFLX) and Tesla Motors (TSLA).  I verified this on CNBC's stock screener, which I would recommend over the Yahoo screener.  Strangely enough, CNBC's screener did not show Skyworks Solutions in my filter, even though the SWKS share price has nearly quadrupled.  I still prefer the CNBC screener over Yahoo since it has better options to search.

Next is Southwest Airlines (LUV) which went from $13.48 a share to $50.35, returning 274% over the same incredible gain.

Ticker 6/21/2013 share price 12/19/2016 share price  3 year gain
LUV 13.48 50.35 274%
AVGO 75.93 180.46 138%
GT 14.94 32.03 114%
AAL 4.06 48.58 1097%
SWKS 21.8 77.44 255%
QRVO 21.28 55.45 161%

The 2 airlines were the biggest winners in the group, but that doesn't make these other winners any less impressive:

  • Broadcom, now trading as AVGO, went from $75.93 a share to $180.46, a 138% gain.
  • Goodyear Tire went from $14.94 a share to $32.03 today.  That's 114% in the green.
  • Skyworks Solutions was trading at $21.80.  Today it trades at $77.44.  That's a 255% gain.  SWKS was trading over $100 per share last year, though I'm just figuring as of today's closing prices.
  • Qorvo (formerly RF Micro Devices) was trading at an equivalent of $21.28, today it trades at $55.45.  That's a 161% gain.

In the same time period, the S&P 500 went from 1,592 to 2,263, a 42% gain.  [Yawn]  This is a great 3-year market return.  Too bad the Way Undervalued stocks above make it sound unimpressive.

You'll notice 1 company that didn't live up to expectations.  Marvell Technology (MRVL) was stripped of it's Way Undervalued status due to lowered earnings revisions.  Today Marvell is actually overvalued based on future earnings, and it has been overvalued for some time now.

How many of these companies are still Way Undervalued?  There are several that still have some solid upside remaining: GT, AVGO, and QRVO.  These 3 are almost Way Undervalued, but not quite.

Only one of these companies is still Way Undervalued: American Airlines.  Southwest and Skyworks are the least undervalued, although they also still have some good upside remaining.

In 2013, chip makers and airlines were THE most undervalued companies due to negative sentiment.  Their shares have since performed as I hoped/expected.  The market finally figured out they were worth more than what they were trading and these industries to come back strong.  Today, there are 3 healthcare stocks that now remind me of Chips/Airlines from a few years ago.  Maybe I'll be writing about these healthcare companies returning 100% or more in a few years?  Don't miss out.  Read about my healthcare picks here.