What makes a portfolio one of the best mutual funds? A nose for the best stocks to buy now, judging by $191 million Commerce Growth Fund (CFGRX).
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The fund is an IBD Best Mutual Funds Award winner. It earned that accolade by beating the S&P 500 in 2018 and in the three, five and 10 years ending that year, on an average annual return basis.
And the fund is positioned to repeat as a winner of the Best Mutual Funds Award, having outscored the big-cap bogey in calendar 2019, 35.55% vs. 31.49%, according to Morningstar Direct.
Commerce Growth’s managers are Joseph Williams, Nong Lin and Matthew Schmitt.
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Best Mutual Funds: Seeking Stocks With Top Earnings, Performance
Top stocks make this one of the best mutual funds. Eight of the fund’s top 10 holdings as of Dec. 31 sported IBD Composite Ratings of 96 or higher. So did both of the fund’s top new buys.
That put them in the top 4% of all stocks on a number of technical and fundamental factors, including both price performance and earnings. Generally, CAN SLIM investors consider only stocks with a score of 90 or higher.
The fund’s lineup of stocks with top-notch Composite Ratings includes Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Mastercard (MA), Visa (V) and Facebook (FB).
Apple’s Growth From Services
Look at some of the stocks that make this one of the best mutual funds.
Apple has soared 87% over the 12 months going into Wednesday. That has given shares — now trading around 319 — a 25% profit from their 221.47 buy point, as MarketSmith analysis shows.
If you got in within the stock’s buy range (221.47 to 232.54), there’s nothing wrong with considering taking profits now.
If you didn’t get in within the buy range, remember that shares are now extended from their buy range.
Apple does not get a lot of its growth from iPhones any more. Much more of that comes from new services and other products. Apple Arcade launched in September and Apple TV Plus launched on Nov. 1.
Can Mastercard Help This Portfolio Remain Among The Best Mutual Funds?
Mastercard is also extended, in its case after breaking out from a 13-week flat base, MarketSmith analysis shows. Trading around 340 now, its buy point was 293.79, with a buy range rising to 308.48.
Shares are currently trading above the stock’s 50-day moving average. Mastercard’s Relative Strength Rating is a strong 90. Its RS line is continuing to make steady progress.
Mastercard stock has a perfect IBD Composite Rating of 99. The stock checkup tool shows it is strong both technically and fundamentally. Mastercard earnings in particular have been strong, with earnings per share growing by 30% annually over the past three years. This is above the 25% growth looked for by CAN SLIM guidelines.
Annual EPS has grown at least eight years in a row. Quarterly EPS grew 14%, 21% and 26% the past three stanzas.
Amazon Drives Into Transportation Field
Amazon is another one of this top mutual fund’s biggest holdings that’s also a member of IBD’s Leaderboard. Leaderboard is IBD’s curated list of leading stocks that stand out for their technical and fundamental prospects.
Amazon stock surged on Jan. 31 after the e-commerce giant blew past Wall Street targets with its fourth-quarter earnings report.
Its $6.47 EPS were 7% higher vs. the year-earlier period. In Q3, EPS had declined 26% to $4.23.
Amazon shares hit an intraday all-time high of 2,185.95, lifting its market value above $1 trillion, before pulling back.
This month, Amazon’s intraday share price set several new all-time highs.
One new market Amazon has entered is transportation. Amazon has invested in electric truck maker Rivian. It has ordered 100,000 electric delivery vans from Rivian. And Amazon has invested in self-driving auto startup Aurora Innovation.
Why This Top Mutual Fund Holds Fiserv
Fiserv (FISV), a financial services technology company, is also a Leaderboard stock. Fiserv has a top-tier Composite Rating of 96. It is not a top 10 holding in the Commerce Growth fund.
Fiserv does happen to be in the IBD buy zone. Shares are trading around 122. Its buy zone reaches from 118.80 to 124.74.
Fiserv sells critical information and commerce-related services to banks, credit unions and investment managers. In July 2019, Fiserv completed its takeover of First Data.
The company’s EPS growth rate averaged 59% over the past three quarters. But its recent fourth-quarter EPS of $1.13 represented a 10% decline from a year earlier. That Q4 result also was below industry analysts’ consensus expectation. The company outlook was cautious.
Sales growth has accelerated five straight quarters. Sales were up 122% and 161% the past two quarters.
Small wonder that its share price rose 43% in the past 52 weeks.
Follow Paul Katzeff on Twitter at @IBD_PKatzeff for tips about personal finance and the best mutual funds that outperform the market by investing in top-performing growth stocks.
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