• Study of the Week: Why Buying Stocks Up 100% In ’12 Is A Good Strategy For ’13

    by  • December 27, 2012 11:57 am • Study of the Week • 0 Comments

    As ’12 winds down, one thing I read recently was the top performing stocks this year were actually also some of the best performers in ’11.  Turns out this is true.

    Rocky White in our QA department helped me on this study and we found there were 14 stocks up 100% in ‘11.  We used a 5,000 open interest filter as well, to get what I’d consider ‘liquid’ names.  Those 14 stocks were up 24.6% so far this year, versus 14.4% for all stocks.  Now it pays to dig a little deeper though, as the media return from those 14 is actually negative and only 50% were positive.  Safe to say this list had some big swings and the names there were strong were definitely skewing the returns.

    Here is a list of the 14 and their returns.

    Is this the case every year?  To have the previous leaders lead the next year?  Kind of sounds rather simple, but going back to ’05, there is some slight outperformance from the previous leaders.  Nothing extreme, but still a little bit better.

    For more fun with numbers, here’s a year by year breakdown of the average return and percent positive for all stocks and those stocks up 100% the prior year.  The up 100% stocks have outperformed going on three straight years and tend to do better than the average stock in terms of average return, but most of the time underperforms in terms of how many are actually positive.  Again, this hammers home that if it is positive, it is really positive.

    Now the obvious question is which of this year’s top performers will be the stars of ’13?  Remember, odds are if it is up for ’13, it’ll be up a lot.  You just have to pick the right one.  Of course, this means a good deal of these will also be negative.

    Here are several lists of the top performers this year.  History suggests some of the biggest winners next year will come from these lists.  Good luck in your research and I hope you find some potential huge winners next year.

    Here are the top 20 returns from stocks with at least 5K OI in ’12.

    Here are the top 20 returns in ’12, but only for stocks over $10.

    Lastly, here are all 41 of the stocks up 100% so far YTD.

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