8/12/2019 Best Stocks for 2014 From the 'Honor Roll' Advisors [Johnson & Johnson, The Walt Disney Company, Berkshire Hat

1/2

2/10/2014 Best Stocks For 2014 From The 'Honor Roll ' Advisors [Johnson & Johnson, The Walt Disney Company, Berkshire Hathaway Inc., PepsiCo, Inc., Berkshir

http://seekingalpha.com/article/2005571-best-stocks-for-2014-from-the-honor-roll-advisors?source=yahoo

Best Stocks For 2014 From The 'Honor Roll' Advisors

Feb. 7, 2014 9:11 PM ETby: Marc Courtenay

"With the economy clearly in growth mode, we continue to give this bull market the benefit of the doubt...it would be amistake to take a negative stance just to be a contrarian." (Jim Stack, Editor, InvesTech Research,written sometimein December 2013).

Mark Hulbert's commentaries and his Financial Digestare consistently helpful and have served the investing publicwell. Hulbert is not a big fan of market forecasting, but he does appear to defer to the perspective that the stockmarket is more a market of stocks.

Hulbert also specializes in following the track records of stock advisory services in what many would call "TheInvestment Publishing Business." The editors and publishers of these advisory services have varying track records as

stock pickers.

At the end of 2013 Hulbert revealed the forecasts of the advisors he ranks highest in his Hulbert Financial Digest's"Honor Roll of Advisors for 2014". He wrote about it in the Dec. 30, 2013 edition of Barron's.

Stocks Most Recommended by Honor Roll Advisors

In an attempt to keep this article brief, I'm going to take the liberty of narrowing down the list to 4 of the 13 stocksthat were most recommended by 3 or more of the advisors on Hulbert's Honor Roll of advisors.

As Hulbert wrote, his Honor Roll rewards advisors list is "Based on performance dating back to early 2000, this year's[2014 choices, were chosen] ... less for overall returns than for performing well in both up and down markets."

So he suggests that these top advisors deserve our attention and respect. They include such well known names asBob Brinker (Bob Brinker's Marketimer) and Jim Stack, quoted at the top of this article.

Names that were not as familiar to me included David Fried (The Buyback Letter) and Jim Lowell (Fidelity Investor).As of the end of 2013, 88% of these advisors' model portfolios were allocated to equities.

The advantage we have today is that we're past the first week of February and we've had about a 6% marketcorrection so far. So almost all the stocks mentioned in the article have corrected.

(By the way, if you want to read the entire Barron's article, you'll need to subscribe. I'm obviously a subscriber and

benefit greatly from reading the publication each weekend.)

The following stocks are 4 of the 13 and they each look to be the best-in-category with plenty of upside potential. I'll

say a few words at the end as to why I chose these 4.

1.Berkshire Hathaway (BRK.Aand BRK.B). Rather than spell out all the advantages of this legendary holdingcompany that Buffett and Munger built I refer to a recent articleby fellow contributor Don Dion. In many ways it couldbe the single most valuable stock to own from an investors viewpoint.

2. The Walt Disney Company (DIS), an iconic entertainment and media empire whose movie unit recently grossed$870 million on the animated musical "Frozen". It helped Disney achieve a 75% increase in operating income for itsmovie division during the company's first fiscal quarter which ended Dec. 28, 2013.

On Dec. 30, 2013, the day Hulbert's article was published, DIS closed at $76.23. On Friday Feb. 7, 2014 sharesclosed at $75.67. So the Honor Roll's recommendation still has plenty of upside with a forward PE of about 16 and a

http://seekingalpha.com/symbol/dishttp://seekingalpha.com/article/2000881-warren-buffett-should-bet-a-billion-on-berkshire-hathawayhttp://seekingalpha.com/symbol/brk.bhttp://seekingalpha.com/symbol/brk.ahttp://online.barrons.com/article/SB50001424053111904742804579278212107177786.html?mod=BOL_article_snippet_more

8/12/2019 Best Stocks for 2014 From the 'Honor Roll' Advisors [Johnson & Johnson, The Walt Disney Company, Berkshire Hat

2/2

2/10/2014 Best Stocks For 2014 From The 'Honor Roll ' Advisors [Johnson & Johnson, The Walt Disney Company, Berkshire Hathaway Inc., PepsiCo, Inc., Berkshir

http://seekingalpha.com/article/2005571-best-stocks-for-2014-from-the-honor-roll-advisors?source=yahoo

price-to-earnings-to-growth (PEG) ratio of a modest 1.22 (5-year expected).

Here's a 1-year chart of these first two stock picks. Notice both recently appear to have bottomed for now and aremoving higher.

BRK.Bdata by YCharts

3. Johnson & Johnson (JNJ). Thanks again to a recent correction this dominating dividend-growing giant of thehealthcare products industry has a lower share price now than on Dec. 30th,when shares closed at $92.30.

At a price of $90 JNJ has a dividend yield of nearly 3% with a forward (1-year) PE ratio of slightly more than 14. Its

PEG ratio is a higher 2.57, not quite the value of Disney but still attractive considering the company's blistering 27%trailing twelve month (TTM) operating margin. For more analysis on JNJ see this recent article.

4. PepisCo (PEP) which is a global food and beverage leader with net revenues of more than $65 billion and a productportfolio that includes 22 brands that generate more than $1 billion each in annual retail sales.

Two major holders of the stock are the CEO, Indra Nooyi, who owns nearly $50 million worth of PEP stock and TrianFund Management, the investment firm led by activist investor Nelson Peltz.

Early last year Pelt's Trian Fund amassed stakes of more than $1 billion in Pepsi and Mondelez International (MDLZ)apparently with the hope of merging the snacks business of PepsiCo with the fast-growing spin-off of Kraft Foods(KRFT).

It appears Peltz has given up on that plan for now, but he recently stepped up his criticism of PepsiCo management.He has publicly stated that he will continue to push for PEP to spin-off its faster-growing snacks unit from itsbeverage business.

All this bodes well for PepsiCo shareholders, who in the meantime enjoy nearly a 2.9% dividend yield with the shareprice at $80.

The 1-year chart below again serves to illustrate that JNJ and PEP are still attractively priced in comparison to wherethey were back on Dec. 30th.

http://seekingalpha.com/symbol/krfthttp://seekingalpha.com/symbol/mdlzhttp://seekingalpha.com/symbol/pephttp://seekingalpha.com/article/1999491-johnson-and-johnson-becoming-interesting-again-for-investorshttp://seekingalpha.com/symbol/jnjhttp://ycharts.com/http://ycharts.com/companies/BRK.Bhttp://ycharts.com/companies/BRK.B/chart/#/?securities=include:true,type:company,id:BRK.B,,include:true,type:company,id:DIS&calcs=include:true,id:price,,&zoom=1&format=real