Looking back, however, the only criterion that wasn’t quite met was the fact that I really didn’t know the company that well, other than what I obtained secondhand from various sources. I did understand the business, medical diagnostic testing, fairly well. I figured it was a growth industry with a rapidly aging population of seniors in the country that would need their services.
So six out of seven criteria seemed to be met.
Results
Since I made these purchases much has happened.
The chart below shows how the stocks have performed. Virtus Investment Partners Inc (NASDAQ:VRTS) is up by almost 80%, Boston Beer Co Inc (NYSE:SAM)by nearly 50% and Bio-Reference Laboratories Inc (NASDAQ:BRLI)down slightly by 3%. The average gain was just above 40%, much better than I expected at this stage.
Virtus Investment Partners Inc (NASDAQ:VRTS) filed its 2012 10-k form on March 1 of this year. The company saw revenue gains of 37% and an increase in operating income of 335%. It added several new investment funds to its portfolio during the year and made a major acquisition. It projected continued strong growth for the rest of this year. After reviewing the fundamentals again, I see no reason to sell.
Right after I bought the stock, Boston Beer Co Inc (NYSE:SAM) reported strong earnings and projected further growth into 2013. Highlights from its recent 10-k release included a projection of continued earnings growth in the low-single digits to mid-double digits and gross margin to stay in the mid-50’s in 2013. The company also said that, for the first time, Sam Adams Boston Lager will be offered in a can. Although the P/E is now a bit high at 36 after the run-up, Boston Beer still looks like a keeper.
Bio-Reference Laboratories Inc (NASDAQ:BRLI) announced its quarterly results a couple of months ago, beating estimates for EPS, but coming up a bit short on revenue, a trend for many companies right now. However, what really hurt the stock lately was fallout from a wrongful termination suit bought against the company by a former employee. The company’s fundamentals haven’t changed all that much. I will probably hold onto the stock. I fully expect it to reverse course and go up again.
Conclusion
Looking at a handful of criteria to assess three stocks allowed me to turn large gains I already made on Apple stock into a further 40% increase in the span of less than six months. One of the stocks has nearly doubled in value.
The process can also be used continually to assess whether or not the stocks are still worth holding. For now, it looks like they are.
And if I decide to take some profit off the table from these three down the road, I can use the seven-step method again to identify other potential winners.
The article 7 Steps to Find Winning Stocks originally appeared on Fool.com and is written by Mark Morelli.
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