Barry Schwartz' Top Picks
FOCUS: North American large cap stocks
My New Year’s Resolutions for 2022:
1) I will always keep in mind that the day-to-day performance of the stock market is due to factors such as: growth, value, momentum, defensive, dividends etc., but what matters over the long run is the earnings and free cash that your company generates, the quality of the business, the valuation you pay and your expectation of future returns.
2) I will not beat myself up over short-term underperformance or missing out on the hottest stock. All investors make mistakes, the best you can do is learn from those mistakes and not lose sight of what you are trying to achieve.
3) I will remember that I am long-term investor. A long-term investor doesn’t buy stocks, they own companies. A long-term investor doesn’t bet on what he/she thinks the market will like in the short-term. Instead, a long-term investor bets on a good company staying good as long as the company has the key elements in place for success.
4) I will make sure to keep the right temperament to not sell winners to buy underperformers because of a valuation alone. There is nothing wrong in trimming a large position, but I will make sure to always put the highest emphasis on the best player on my investment roster.
5) Finally, I will stay optimistic. Had I told you at the beginning of 2021 that interest rates would go up, inflation would rise to levels not seen in decades, the pandemic would intensify, we would have a supply chain nightmare, and labour shortages would be pervasive, you may have never believed that North American stock markets would rise by over 20 per cent for the year.
CoStar Group (CSGP NASD)
CoStar is the leading provider of commercial real estate data, selling proprietary information on a subscription basis to brokers, property managers, real estate owners and investors, to name a few. It also owns several marketplaces, like Apartments.com, where advertisers can list their vacancies. The company is the dominant provider in North America and has plans to build out its international business over the coming years. CoStar is growing its business at double-digit rates, generates incredible returns on investment and has lots of potential to add new lines of business.
Watsco (WSO NYSE)
Watsco is the largest HVAC distributor in North America, selling new equipment and replacement parts to over 90,000 contractors. The company has grown by acquisitions and by offering its customers the best-in-class service as well as digital tools to assist with ordering. This capital light business generates significant cash flow, which the company has been returning to shareholders in terms of dividend increases. Since the end of 2013, Watsco has increased its dividend by close to 400 per cent.
Copart (CPRT NASD)
Copart is the largest salvage auction company in the U.S. and is one of only two companies that has the scale and buyer network to service insurance companies on a national basis. The company is benefitting from several tailwinds, including strong demand for used cars as well as extremely high repair costs for vehicles in accidents. The company is bullish about its potential volume growth and is actively looking to increase the number of its scrap yards in the U.S. and abroad.
PAST PICKS: November 25, 2020
Google (GOOGL NASD)
- Then: $1,764.13
- Now: $2,908.96
- Return: 65%
- Total Return: 65%
Constellation Software (CSU TSX)
- Then: $1,595.84
- Now: $2,346.94
- Return: 47%
- Total Return: 47%
Granite REIT (GRT-U TSX)
- Then: $75.10
- Now: $105.40
- Return: 40%
- Total Return: 45%
Total Return Average: 52%