Sun. Apr 5th, 2020

This Fund Races Past Market With 380 Top Growth Stocks

This Fund Races Past Market With 380 Top Growth Stocks

Diversification can water down performance. But with 380 holdings — the bulk of which are top growth stocks — MassMutual Premier Disciplined Growth Fund (DEIGX) still outperforms.


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The $263.2 million mutual fund topped the S&P 500 in 2019 as well as in the three, five and 10 years ended Dec. 31 on an average annual return basis.

The portfolio held 380 stocks as of Sept. 30. Holdings included leading growth stocks such as Lululemon Athletica (LULU), Adobe (ADBE), Copart (CPRT), Intuitive Surgical (ISRG) and ServiceNow (NOW).

Gains over the past 12 months ranged from 10% by Intuitive Surgical to 99% by Copart.

Growth Stocks That Stand Out

All five of those stocks are members of the IBD Leaderboard as well as members of the IBD 50 as of Jan. 27.

Leaderboard is IBD’s curated list of leading stocks that stand out for their technical and fundamental prospects.

The IBD 50 is a flagship screen of leading growth stocks that show strong relative price strength and top-notch fundamentals.

And the first four of those stocks had IBD Composite Ratings of 99 as of Jan. 27. Copart has an IBD Composite Rating of 98.

A Composite Rating of 99 means that a stock is in the top 1% 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.

Aiming To Repeat As One Of The Best Mutual Funds

The fund’s 2019 outperformance positions it for a return to the champions’ podium in the upcoming annual compilation of IBD’s Best Mutual Funds Award winners. The fund was one of the award recipients in 2019 for outperforming the S&P 500 in the four measured time periods.

The fund benchmarks itself against the Russell 1000 Growth Index, which includes midcap stocks, unlike the big-cap oriented S&P 500.

What Makes Lululemon One Of The Top Growth Stocks

Athletic apparel retailer Lululemon looked strong over the holidays.

Third-quarter earnings and sales, reported Dec. 10, topped analysts’ estimates. Same-store sales rose 17%. It was Lululemon’s best holiday season in six years.

Shares fell nearly 4% the day after the quarterly earnings report as the Q4 outlook then came in below expectations.

Still, earlier this month Lululemon raised its Q4 outlook for both revenue and earnings. The day before the announcement, shares gapped up more than 4%.

The quarter ends Feb. 2 for Lululemon. The company expects to earn between $2.22 and $2.25 per share, up from its previous estimate of $2.10 to $2.13 per share. Both are based on a 28.5% effective tax rate.

The company also now forecasts quarterly net revenue of $1.37 billion to $1.38 billion, up from $1.315 billion to $1.33 billion.

Adobe’s Innovation Makes It A Leading Growth Stock

Adobe’s earnings per share grew 10%, 10%, 18% and 25% the past four quarters.

Adobe began as a publishing and design software company. More recently, it expanded into the software-as-a-service (SaaS) business, helping customers with their digital marketing. The company sells a suite of creativity, design, marketing, analytics and business solutions products.

The stock ranks No. 1 in IBD’s Computer Software-Desktop industry group. In turn, the group ranks a strong No. 29 out of IBD’s 197 groups, according to IBD’s Stock Checkup tool.

The stock has an IBD EPS Rating of 98.

The EPS Rating is on a 1-to-99 scale (with 99 being best), comparing Adobe’s earnings per share growth on both a current and annual basis with all other publicly traded companies in the William O’Neil + Co database. Its Rating of 98 means the stock has outperformed 98% of all publicly traded companies in earnings.

Also, the stock has an IBD SMR Rating of A. The SMR Rating (Sales + Profit margins + Return on equity) of A shows that it ranks in the top 20% of all publicly traded stocks when it comes to a composite measurement of sales growth, profit margins and return on equity ratios.

One key drawback: Share price is extended from a recent buy zone after years of big gains, according to IBD MarketSmith analysis.

Copart Makes Money Off Car Wrecks

Copart helps insurers, rental car companies, financial firms and charities sell millions of salvage vehicles through online auctions and remarketing.

Copart is a key link in the disposal and rebirth of damaged vehicles. Many cars can be repaired at lower costs in foreign markets due to lighter regulatory requirements and lower labor costs. Copart’s salvage vehicles originate both in the U.S. and outside.

Because demand for Copart’s services is steady, its business is largely untouched by economic cycles.

Copart’s EPS have grown 11%, 27%, 43% and 38% the past four quarters.

Its sales grew 6%, 16%, 21% and 20% in those same stanzas.


Follow Paul Katzeff on Twitter at @IBD_PKatzeff for tips about personal finance and active managers of the best mutual funds who outperform the market by picking top-performing stocks.


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