Despite the Federal Reserve’s affirmation of more interest rate hikes in 2023, the GuruFocus GF Score Less Than 100 Top 25 Companies model portfolio has outperformed the Standard & Poor’s 500 Index benchmark over the past six months. The stocks that fueled the model portfolio’s performance include Nvidia Corp. (NVDA, Financial), Copart Inc. (CPRT, Financial), Saia Inc. (SAIA, Financial), Monolithic Power Systems Inc. (MPWR, Financial) and Apple Inc. (AAPL, Financial).
On Wednesday, Federal Reserve Chairman Jerome Powell said in prepared remarks for his semiannual monetary policy report to Congress that the central bank remains “strongly committed” to bring inflation back down to its 2% target. Powell further mentioned that while the U.S. economy has slowed down over the past 12 months, inflation remains above the 2% target: Total personal consumption expenditures excluding food and energy climbed approximately 4.7% year over year during April, while the core consumer price index climbed approximately 5.33% year over year during May.
The chairman then mentioned that while the Federal Open Market Committee kept the federal funds target rate between 5% and 5.25% during the meeting last week, nearly all committee members said that further interest rate hikes “may be appropriate” during the second half of the year to achieve the Fed’s long-term inflation target.
Despite high interest rates, GuruFocus’ GF Score Less Than 100 Top 25 Companies model portfolio has returned approximately 24.1% year to date as of Wednesday, compared to the S&P 500 return of approximately 14.3%.
GuruFocus’ exclusive stock rank has been found to closely correlate with stock performance based on backtesting from 2006 to 2021. The GF Score contains five key ranks: financial strength, profitability, GF Value, growth and momentum. Each of the five component ranks is graded from 1 to 10, with 10 as the highest score. Likewise, the GF Score is graded from 0 to 100, with 100 as the highest score.
GuruFocus’ backtesting research suggests that stocks with higher GF Scores have higher outperformance potential. The Model Portfolios feature further supports the above observation. Table 1 illustrates the year-to-date performances of the GF Score model portfolios as of Wednesday:
| Model Portfolio | Year-to-Date Return as of June 21 |
| GF Score Less Than 100 Top 25 Companies | 24.1% |
| GF Score Less Than 90 Top 25 Companies | -4.19% |
| GF Score Less Than 80 Top 25 Companies | -3.18% |
| GF Score Less Than 70 Top 25 Companies | 4.96% |
| GF Score Less Than 60 Top 25 Companies | 3.29% |
Table 1
Nvidia
Shares of Nvidia (NVDA, Financial) traded around $428.18 on Wednesday, showing the stock is significantly overvalued based on its price-to-GF Value ratio of 1.59. The stock has gained approximately 191.19% year to date.
Although Nvidia is the top-performing stock in the model portfolio, the Santa Clara, California-based graphics processing units company has a GF Score of just 86 out of 100 as of Wednesday. While the stock ranks 10 out of 10 for profitability and growth, Nvidia scored just 7 out of 10 for financial strength, 6 out of 10 for momentum and 1 out of 10 for GF Value.
The company’s high profitability rank is driven by several positive investing signs, which include a four-star business predictability rank and a gross profit margin that outperforms approximately 88% of global competitors.
Gurus with holdings in Nvidia include Baillie Gifford (Trades, Portfolio), Ken Fisher (Trades, Portfolio)’s Fisher Investments and the Harbor Capital Appreciation Fund (Trades, Portfolio).
Copart
Shares of Copart (CPRT, Financial) traded around $88.88 on Wednesday, showing the stock is fairly valued based on its price-to-GF Value ratio of 1.05. The stock has gained approximately 45.25% year to date.
The Dallas-based online auction and vehicle remarketing services company's high GF Score of 96 out of 100 is driven by a rank of 10 out of 10 for financial strength, growth and profitability. Despite this, Copart’s momentum ranks 6 out of 10, while its GF Value ranks just 5 out of 10.
Copart’s positive investing signs include a four-star business predictability rank, a strong Altman Z-score of 36, a three-year revenue growth rate that outperforms more than 84% of global competitors and an operating margin that has increased by approximately 4.9% per year on average over the past five years.
Saia
Shares of Saia (SAIA, Financial) traded around $314.33 on Wednesday, showing the stock is modestly overvalued based on its price-to-GF Value ratio of 1.14. The stock has gained approximately 45.48% year to date.
The Johns Creek, Georgia-based trucking company has a GF Score of 90 out of 100: Even though the company’s GF Value ranks just 3 out of 10, Saia scored a 9 out of 10 for financial strength, profitability, growth and momentum.
Saia’s positive investing signs include a three-star business predictability rank, a strong Altman Z-score of 11.18 and an operating margin that has increased by approximately 19.90% per year on average over the past five years.
Monolithic Power Systems
Shares of Monolithic Power Systems (MPWR, Financial) traded around $511.34 on Wednesday, showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.75. The stock has gained approximately 44.23% year to date.
The Kirkland, Washington-based power management semiconductor company has a GF Score of 100 out of 100 based on a GF Value rank of 9 out of 10 and a rank of 10 out of 10 for financial strength, profitability, growth and momentum.
Monolithic Power Systems’ positive investing signs include a four-star business predictability rank, a high Piotroski F-score of 7 out of 9, a strong Altman Z-score of 35, an operating margin that has increased by approximately 10.20% per year on average over the past five years and three-year revenue and Ebitda growth rates that outperform more than 88% of global competitors.
Apple
Shares of Apple (AAPL, Financial) traded around $184.84 on Wednesday, showing the stock is fairly valued based on its price-to-GF Value ratio of 1.07. The stock has gained approximately 42.57% year to date.
The Cupertino, California-based consumer electronics giant has a GF Score of 93 out of 100 based on a rank of 10 out of 10 for profitability and growth, a momentum rank of 9 out of 10, a financial strength rank of 7 out of 10 and a GF Value rank of 3 out of 10.
Apple’s high profitability is driven by several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased by approximately 2.70% per year on average over the past five years and outperforms more than 97% of global competitors.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) owns 915,560,382 shares of Apple as of the first quarter, giving the position 46.44% weight in its 13F equity portfolio.
Apple has been Berkshire’s largest holding since December 2017.
