David Sharek’s
Growth Stock Newsletter
Searching for Tomorrow’s Stock Market Winners Today
February 15, 2016
Don’t Follow The Herd
have been hit hard. Bill Ackman’s hedge fund Pershing
Square has fallen 19% year to
date, after being down 21% last
year (source: Business Insider).
For years Central banks and
Baron Partners fund (BPTRX),
Sovereign wealth funds, such as
run by buy-and-hold manager
Norway, Abu Dhabi, China and
Ron Baron, has lost 22% year to
Saudi Arabia, have bought up
date. One manager performing
foreign currencies — such as the
well is Frank Caruso (AB Large
US dollar — to prevent their own
Cap Growth Fund) who’s avercurrencies from rising too fast.
aged 15% the past 4 yrs. Top
But now that oil has fallen from holdings as of 12/31 were Alphabet, Apple, Facebook, Bio$100 to $30, Middle Eastern
gen, Intuitive Surgical, Home
Sovereign wealth funds have
been selling assets to fill the gap Depot, Visa, United Health and
CVS. Of these, my portfolios hold
in the budget. Japan’s market
consumers pockets (who then
has been one of the hardest hit, all but 2 (AAPL & ISRG).
spend it). Port of LA, the nation’s
as have European banks, which
Bond yields have fallen more
#1 container port, just had its
are widely held by SWTs. The
than 10% the past two weeks,
busiest January ever. Also, cash
CEO of Nomura, Japan’s biggest
while gold has rallied more than
held by investors is at the highbrokerage firm, says investors
10%. Since 1975 there have
est its been since November
can expect a “sharp rebound”
only been three other times
2001 (source: Bank of America).
once the SWF selling stops
when this has happened, with
(Source: Financial Times).
each leading to gains of 20% or The Herd sees fear and panic. In
times of panic the smart investor
Also, rich Chinese are also taking more for stocks over the next
sees opportunity. The “risk off”
year. The surge in bonds and
their money out of China, and
trade is in its late stages. Utilities
China is spending its reserves to gold suggest panic on a rarelywere cheap after they fell 11%
achieved
level
(source:
Sentiprevent the yuan from declining.
the 1st 6mo of 2015. The Utility
mentrader).
Meanwhile the selloff in stocks
P/Es were 15 last year, comhas caused a panic, with inves- The Herd has fled for safety, no pared to 17 for the market (S&P
tors diving into treasuries, gold, one wants growth stocks, and
500). Now the Utilities have P/Es
there lies opportunity. Low oil is
utilities and cash while fleeing
of 17 while the S&P trades for
growth stocks. Star money man- good long-term, as it helps com- 15x earnings.
panies profit and puts money in
agers with great track records
The reason for the stock market
selloff isn’t fear of a recession,
its that Sovereign wealth funds
have been dumping stocks.
In time, The Herd will look for
growth. “A premium will be paid
for even scarcer growth” — Rhino
trading’s Michael Block. When
this occurs, growth stocks could
shoot higher. My research shows
there are 70 good stocks with
est long-term profit growth rates
of 15%+, 50 of these have and
consistency (have you done
this?) and certainty (will you do
this?). We own most of these, I
need to collect the others while
they are down. These (with Est
LTG) include: Tesla (101%), Netflix (31%), Salesforce.com (31%),
Albhabet (16%), Starbucks
(18%), Ulta Salon (20%), Under
Armour (23%) & Illumina (20%).
About David Sharek
David started his career as a Financial Consultant at A.G.Edwards &
Sons in 1999, investing clients in
mutual funds, stocks, bonds & annuities. The 2000 stock market
crash crushed his investors and left
David leery of Wall Street & mutual
funds. Sharek became a student of
stocks, and discovered the best
stocks had the highest profit growth.
In 2002 David accepted a position
of Vice President—Investments at
Wunderlich Securities and developed his Growth Stock Portfolio.
Sharek’s portfolio averaged a return
of 24% his first five years as a portfolio manager (2003-2007), more
than double the market’s (S&P 500)
average of 11%. David soon got
client portfolios back to even.
In 2008 David Sharek founded
DavidSharek.com a stock research
website and money management
firm. Another stock market crash
took the Growth Portfolio down 58%
that year, and by 2013 client accounts hit new highs. From his office
in Midtown Manhattan David Sharek
does his own stock research and
manages portfolios on a fee basis.
Through 2015, the Growth Portfolio
has grown 13% a year, compared to
the market’s average of 8% (20032015). $100,000 invested in the
Growth Portfolio at inception would
have made a profit of $175,093 vs.
a $132,313 profit in
the S&P 500. Sharek’s
posted three years of
greater than 40%
returns in 12 years as
a stock portfolio manager. Questions? Call him direct at 917-6578126.
Learn more at davidsharek.com
and shareks.com
Twitter: @GrowthStockGuy
FB: Facebook.com/GrowthStockGuy
David Sharek’s Growth Stock Newsletter
February 2016
Stock Research
Use Our Online Stock Research
If you like stock market news
and read stock research, visit
davidsharek.com for:
•
Stock Market News
•
get Sharek’s Take
•
read Research Reports
•
see Stocks on the Radar
•
and download David
Sharek’s Growth Stock
Newsletter each month.
Here are recent stock research
articles on DavidSharek.com:
Starbucks Stock is Premium
Coffee
Apple’s Profits Grew Just 7% Last
Qtr
Follow David Sharek
Starbucks (SBUX) is growing at a Apple's (AAPL) profit growth
high-teens rate, but at 33x earn- shrunk to 7% last qtr, that's why
ings this stock is a bit rich.
the stock fell.
MasterCard is Growing in the
Single Digits
MasterCard (MA) is growing profits in the mid-single digits and I
would like to see better growth
or a lower price before buying in.
Follow David Sharek on
Twitter and Facebook for
breaking stock market
news.
A Premium Position
@GrowthStockGuy
Ulta Salon (ULTA) is in a premium position because sells in
the US, and sizzling same store
sales growth is pushing ULTA
higher.
Facebook.com/GrowthStockGuy
The Stock Market
The United States is in good
shape, with low oil and interest
rates helping consumer spending,
which is 70% of our economy. The
chance of recession in the US is
around 20%. U.S. banks are more
capitalized than 2008 and hold
maybe just 2% of loans in oil and
gas. The problem in the US is a
strong dollar is making it hard for
big multi-nationals (Dow stocks)
to grow profits at double-digit
rates. Foreign exchange is holding
back profit growth. That combined with losses from energy
companies is hurting profitability
in the S&P 500.
Profit History
Market drops of 10% or more
Year
Profits
while GDP is positive has hap2006
$87.72
pened 7x since 1990, one once
2007
82.54
(1990) was there a recession
2008
65.47
with the S&P higher 100% of the
2009
60.80
time 6mo later, & an avg gain of
2010
85.28
21% (ex-2008) (Source: Kensho).
The S&P 500 sells for 15x 2016
profit estimates, my Fair Value is
17x and equates to upside of
11% this year, 13% including
dividends. Also, the S&P dividend
yield is 2.35%, 0.6% higher than
the ten year treasury at 1.75%,
the most since 2009, the year the
last Bull Market began.
2011
97.84
2012
103.80
2013
109.68
2014
118.78
2015
116.18
Fair Value
This Qtr $121.58
2016 Est 121.58
2017 Est 133.73
x
x
x
x
x
x
x
x
x
x
x
P/E
15
18
17
15
13
13
13
15
16
17
= MedPrice
=
1326
=
1470
=
1106
=
899
=
1137
=
1223
=
1367
=
1638
=
1916
=
2001
x
x
x
15
17
17
=
=
=
Dividend
24.88
27.73
28.05
22.31
23.13
26.02
30.44
36.28
38.57
38.57
Upside/Downside
1865
11%
2067
22%
2273
Yield
1.9%
1.9%
2.5%
2.5%
2.0%
2.1%
2.2%
2.2%
2.0%
1.9%
TotRetrn
13%
26%
Blast from the Past — Wal-Mart (WMT)
Annual
Profits
Wal-Mart (WMT)
1985 - 1994
20
18
16
14
12
10
8
6
4
2
0
nJa
nJa
nJa
nJa
nJa
nJa
nJa
nJa
nJa
94
93
92
91
90
89
88
87
86
85
Profit
Growth
Rate
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
nJa
Wal-Mart (WMT) was a great
growth stock during the 1970s
and 1980s, but had many harsh
corrections. In July ‘83 WMT hit a
high of $1.45, then fell to $0.94
in 7 months. In October ‘87 it hit
a high of $4.86 then dropped
more than 40% to $2.75 after
Black Monday. In the chart to the
right you see WMT hit a peak of
$17 in early 1993. The stock
then fell into the low-teens until
In my experience, growth stocks
early 1997, when it broke out and
go up twice as much as the marblasted to $70 in 3 years. Growth
ket when it rises, and go fall twice
stocks may provide superior reas hard when the market deturns, but not consistent ones.
clines. Higher returns ain’t easy.
Stock Price
Over long periods of time, stock
growth reflects profit growth. Thus
companies that grow profits 25%
per year might have 25% stock
growth during a ten-year period.
Unfortunately stocks do not provide consistent returns, especially
growth stocks. Thus I feel its best
to own a vast portfolio of growth
stocks, as some might do well as
others do poorly.
+17% +21% +37% +41% +33% +28% +20% +23% +17% +15%
0.06
0.07
0.10
0.14
0.19
0.24
0.29
0.35
0.44
0.51
0.59
Yearly EPS
Growth: 25%
Yearly Stock
Growth: 25%
David Sharek’s Growth Stock Newsletter
February 2016
Current Holding — Facebook (FB)
After earnings, the stock broke
out to an All Time high, a bullish
Fair Value
Year
Profits
x
P/E
This Qtr
3.15
x
32
2016 Est
3.15
x
45
2017 Est
4.13
x
45
buy signal, then unfortunately fell
back with the stock market. FB’s
one-year chart is on the right.
With profits growing around 45%,
I feel FB is worth 45x profits,
which is $142 this year and $186
next year. The stock is around
$100 now. Facebook is my top
holding in the Growth Portfolio
and Aggressive Growth Portfolio.
Facebook (FB)
Est. Long Term Growth Rate:
32%
130
P/E: 32
Annual
Profits
120
2012
2013
2014
2015
2016
110
Stock Price
I think Facebook (FB) is our ace in
the hole this year. The social network was expected to post 24%
profit growth last qtr, and
smashed estimates with 46%
growth. Revenue grew 52%, 60%
if you take out foreign exchange.
Video ads are where the money
is.
100
90
0.53
0.88
1.77
2.28
3.15e
80
70
=
=
=
=
Price
$101
142
186
Upside/Downside
40%
84%
60
Profit
Growth
Rate
Fe
b
-15
Ma
A
A
S
O
D
M
J
J
N
J
r-1 pr-15 ay- un- 1 ul -15 ug- 1 ep- 1 c t-15 ov- 1 ec- 1 an- 1
5
15
5
5
5
5
6
5
Estimates
+24%
+19%
+33%
+46%
+48% +44%
4QtrsAgo
3QtrsAgo
2QtrsAgo
LastQtr
NxtQtr
2QtrsOut
Stocks on the Radar — Tesla (TSLA)
will go up 4-5x in 4-5 yrs, then 45x more the following 5-6 years.
The stock market is in its deepest
correction since 2011, which is
Tesla is set to unveil its newest
long overdue and ultimately posicar in March, which is expected to tive. The next batch of big winning
stocks will emerge from this conbe $35,000 and will be a huge
catalyst that could catapult TSLA solidation (source: IBD). TSLA
stock like the iPhone did to Apple could be one of them, and is a
stock at the top of my radar.
stock. Ron Baron predicts TSLA
Fair Value
Year
Profits
This Qtr
1.45
2016 Est
1.45
2017 Est
3.59
x
x
x
x
P/E
104
75
75
=
=
=
=
Price
$151
109
269
Upside/Downside
-28%
78%
Tesla (TSLA)
Est. Long Term Growth Rate:
Stock Price
Growth stocks like Tesla (TSLA)
have taken a beating, but could
bounce back in a big way once a
new Bull Market begins.
101%
325
300
275
250
225
200
175
150
125
100
Profit
Growth
Rate
P/E: 104
Annual
Profits
2010
2011
2012
2013
2014
2015
2016
Fe
b
-15
Ma
A
O
S
D
A
M
J
J
N
J
r-1 pr-15 ay- un- 1 ul -15 ug- 1 ep- 1 c t-15 ov- 1 ec- 1 an- 1
15
5
5
5
6
5
5
5
-1.38
-2.21
-3.20
0.78
0.14
-2.30
1.45e
Estimates
N/A
N/A
N/A
N/A
N/A
+123%
4QtrsAgo
3QtrsAgo
2QtrsAgo
LastQtr
NxtQtr
2QtrsOut
Stock Education
During 2003-2006 David wrote
the portfolio management blueprint, The School of Hard Stocks,
and executed the plan. During
those four years he used this
strategy to compile a compounded return of 100.57%.
portfolios 42% and beat the
market (S&P 500) by 39%.
(ISRG), Priceline.com (PCLN)
and Research in Motion (RIMM).
Five of those six stocks continue
In January 2008 David wrote a
to be stock market leaders and
postscript to the book and had
are in his portfolios today. Read
The School of Hard Stocks pubmore and look inside at
lished through Amazon.com and
schoolofhardstocks.com.
Barnes & Noble. In the postCompleted at the end of 2006, script he wrote to hold Apple
Buy it Now
Sharek used The School of Hard (AAPL), Baidu.com (BIDU),
Stocks in 2007 to grow stock
Google (GOOG) Intuitive Surgical Buy it Now
Any information provided in this letter has been prepared from sources believed to be reliable, but is not guaranteed by DavidSharek.com and/or Shareks, LLC and is not a complete
summary or statement of all available data necessary for making an investment decision. In addition, such information may be condensed or contain calculated data which should be
verified by the recipient. Any information provided is for informational purposes only and does not construe a recommendation. To the extent that financial projections are contained
herein, such projections are dependent on the occurrence of future events, which cannot be assured; therefore, the actual results achieved during the projection period, if applicable,
may vary from the projections. DavidSharek.com and its employees may own options, rights or warrants to purchase any of the securities mentioned in this letter. Any review, retransmission, dissemination or use of, or taking action in reliance upon this information by persons or entities other than the intended recipient is prohibited. If you received this letter in
error, please contact the sender immediately and disregard.
David Sharek’s Growth Stock Newsletter
February 2016
Portfolio Management
Let us manage your stock portfolio
Watch your account
Clients can log online and view
their accounts at anytime.
Security
Shareks, LLC is registered with the
State of New York as an investment advisor (RIA). Accounts are
kept safe at brokers such as
Scottrade and Interactive Brokers
and are insured by SIPC.
Sector Key
Healthcare
Food & Necessities
Technology
Financial
Retail & Travel
Energy & Commodities
DavidSharek.com
230 East 30th St. Suite 15 G
New York, NY 10016
917.657.8126
info@davidsharek.com
- $232,313
$200,000
$150,000
S&P 500 -
$100,000
Growth Portfolio -- Power Rankings
Trend Ticker Security name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
FB
ADBE
CELG
AMSG
REGN
STMP
AMZN
ACHC
ULTI
ICLR
LNKD
BWLD
RH
CTSH
PCLN
PANW
FLTX
AGN
NHTC
ORLY
FIVE
DG
NOAH
CHUY
CMG
WBA
CVS
V
ADS
CERN
VRX
HAR
HAIN
ESRX
ALXN
GILD
PRAA
ODFL
BIIB
Facebook
Adobe Systems
Celgene
AmSurg
Regeneron
Stamps.com
Amazon.com
Acadia Healthcare
Ultimate Software
ICON
LinkedIn
Buffalo Wild Wings
Restoration Hardware
Cognizant Tech. Solut.
Priceline.com
Palo Alto Networks
Fleetmatics
Allergan
Natural Health Trends
O'Reilly Automotive
Five Below
Dollar General
Noah Holdings
Chuy's
Chipotle
Walgreen's
CVS Caremark
Visa
Alliance Data Systems
Cerner
Valeant Pharmaceuticals
Harmon
Hain Celestial
Express Scripts
Alexion Pharmaceuticals
Gilead Sciences
Portfolio Rec. Assoc.
Old Dominion Freight
Biogen
Average
January 2016 Additions and Deletions
Trend Symbol Company
Bought
ADBE
Adobe Systems
AMZN Amazon.com
ICLR
ICON
LNKD
LinkedIn
SDS
ProShrsUltraShortS&P
Sold
AAPL
Apple
HAWK Blackhawk Network
TD
TD Bank
LTG
P/E
33%
60%
21%
39%
N/A
34
118
15
66
N/A
13%
20%
11%
2013
49%
30%
$102
$77
$102
$65
$379
$86
$508
$54
$160
$67
$101
$145
$47
$54
$1,058
$124
$38
$280
$25
$253
$34
$70
$22
$29
$481
$77
$96
$70
$183
$55
$88
$70
$35
$67
$141
$89
$26
$61
$247
1/15/16
1/15/16
1/22/16
1/22/16
1/25/16
$88
$569
$68
$194
$25
2/13/15
7/22/15
7/16/15
$126
$44
$41
2014 2015 Avg
5% -16% 13%
11% -1% 8%
2016
2017
FairValue FairValue
$129
$169
$111
$148
$154
$196
$124
$141
$627
$777
$130
$156
$422
$767
$88
$104
$251
$317
$94
$104
$221
$317
$175
$212
$138
$170
$77
$88
$1,508
$1,747
$177
$273
$62
$75
$354
$416
$60
$80
$270
$306
$42
$51
$75
$86
$38
$48
$37
$41
$573
$675
$93
$105
$105
$118
$72
$84
$344
$392
$78
$90
$242
$281
$130
$154
$54
$62
$99
$108
$178
$231
$133
$136
$57
$63
$59
$68
$334
$361
Buy Date Buy Price Sell Date
1/5/16
1/6/16
1/7/16
Dec-15
2012
2%
13%
Price
Dec-14
2009 2010 2011
31% 24% 2%
23% 13% 0%
Est
LTG
30%
33%
24%
18%
22%
20%
60%
27%
22%
21%
36%
18%
27%
16%
15%
42%
23%
9%
50%
17%
23%
13%
25%
25%
21%
14%
14%
16%
15%
18%
24%
15%
15%
13%
20%
14%
15%
15%
15%
22%
Dec-10
Dec-09
Dec-08
2007 2008
42% -58%
4%
-38%
Dec-13
2006
15%
14%
Dec-12
2004 2005
16%
9%
3%
9%
Dec-11
2003
Year
GrowthPort. 41%
26%
S&P 500
Dec-07
$50,000
Dec-06
We grow when you grow. Shareks,
LLC bills client accounts 0.75% per
quarter (3% per year). Fees may be
tax deductible. Also, clients are
charged commissions by their
brokerage firm when trades are
made, usually $1 to $7 per trade.
- $275,093
Growth Portfolio -
$250,000
Dec-05
Fee-based account management
$300,000
Dec-04
David manages each account individually — this isn’t a mutual fund
— you own the stocks. Your account is in your name and is not
commingled with other clients.
$350,000
Dec-03
You own the stocks
2003 (inception) through 2015
$400,000
Dec-02
David Sharek manages brokerage
accounts and IRAs of $50,000 or
more on a fee-basis. Returns
shown here are after fees.
David Sharek's Growth Portfolio vs. S&P 500
2016
Upside
26%
44%
51%
91%
65%
51%
-17%
63%
57%
40%
119%
21%
194%
43%
43%
43%
63%
26%
140%
7%
24%
7%
73%
28%
19%
21%
9%
3%
88%
42%
175%
86%
54%
48%
26%
49%
119%
-3%
35%
53%
Price
Gain/Loss
$99
$42
$36
-21%
-5%
-12%
Total
177%
118%
2017
Upside
66%
92%
92%
117%
105%
81%
51%
93%
98%
55%
214%
46%
262%
63%
65%
120%
97%
49%
220%
21%
50%
23%
118%
41%
40%
36%
23%
20%
114%
64%
219%
120%
77%
61%
64%
53%
142%
11%
46%
85%