Eddie Elfenbein started the Crossing Wall Street blog in 2006 by making 25 top stock picks and holding them for 12 straight months with no changes. Then, at the end of the year, he drops five names, adds five more and repeats the process.
Elfenbein has done this for 18 years. He’s been so successful that he started an ETF—the AdvisorShares Focused Equity ETF (NYSEARCA:CWS)—based on the “Buy List” in 2016.
Since 2018, the ETF has outperformed Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) and Cathie Wood’s ARKK Innovation ETF (NYSEARCA:ARKK) by 36 and 65 percentage points, respectively.
“When I started the blog almost 20 years ago, I wanted to show investors that you can do very well in investing with a ‘set and forget’ mentality,” Elfenbein said on Downtown Josh Brown’s The Compound and Friends podcast, Business Insider recently reported.
“You don’t have to do a lot of trading. You don’t have to be in and out. You don’t have to get well-known growth stock names. You can get a sort of a boring portfolio, set and hold it, and be disciplined and do very well.”
It’s been years since I read Elfenbein’s blog. It’s easy to see why he’s done well. He’s got a system that’s simple and works.
Here are three stock picks from Crossing Wall Street’s 2024 Buy List worth owning for the long haul.
Top Stock Picks: Hershey (HSY)
Hershey (NYSE:HSY) is a favorite stock of mine, so I was happy to see it on Crossing Wall Street’s Buy List. Unfortunately, as Elfenbein wrote on Dec. 31, summarizing the performance of his list of 25 stocks, Hershey was the worst performer, down 17.88% on the year, including dividends. Only five other stocks were in negative territory in the past year.
Hershey was added to the 25 stocks at the beginning of 2019 and has been on it ever since. Hershey’s stock from the beginning of 2019 to Jan. 18, 2024, is up 80%. That’s good, but it could have been better if not for the seventh-month swoon from May 2023 that chopped off 35% of its value.
The good news is that Hershey’s share price woes aren’t company-specific but industry-wide. The Consumer Staples Select Sector Fund (NYSEARCA:XLP) had a total return of -0.83% in 2023, considerably worse than the 26.19% total return of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY). Of course, XLP did much better than SPY in 2022, so it hasn’t done too badly in recent years.
Hershey expects 2023 sales growth of 8% combined with 11.5% adjusted earnings per share growth at the midpoint of its guidance.
I have complete confidence in CEO Michele Buck, who has led the company since March 2017. Chocolate and candy always stay in style.
McGrath RentCorp (MGRC)
McGrath RentCorp (NASDAQ:MGRC) is a company that I need to familiarize myself with. It is a new addition to the Crossing Wall Street Buy List in 2024.
“McGrath rents relocatable modular buildings, portable storage containers, electronic test equipment and liquid-containment tanks. This means things like modular classrooms. Or imagine a construction site in the middle of nowhere. McGrath can rent the foremen an instant office. These things are more common than you might expect,” Elfenbein wrote on Dec. 25, 2023.
“But McGrath does more than that. It also rents test equipment and storage tanks. The company has raised its dividend for 32 years in a row.”
McGrath isn’t in the S&P 500. Otherwise, it would be a Dividend Aristocrat, those companies in the index that have increased their annual dividend payment for at least 25 consecutive years.
In Canada, where I live, ATCO (OTCMKTS:ACLTF) makes good money from its Structures business that sells and leases transportable workforce, residential housing and space rental products.
Otis Worldwide (OTIS)
The last Crossing Wall Street stock buys I particularly like is Otis Worldwide (NYSE:OTIS), the elevator and escalator company that United Technologies spun off in April 2020. Elfenbein also added Carrier Global (NYSE:CARR), the air conditioning people, who were also spun off in 2020. Both were added to the 2022 Buy List and remain.
I recently named Otis one of three urbanization stocks likely to capitalize on the ongoing growth of cities.
When Elfenbein added Otis at the end of 2021, Otis had 2.1 million units in operation. Today, that’s grown to approximately 2.2 million units and $13.7 billion in annual revenue.
In the trailing 12 months ended Sept. 30, 2023, Otis had a free cash flow of $1.36 billion and net income of $1.38 billion, for a free cash flow conversion rate of 98.6%. The higher, the better. Its net debt as of September was $6.06 billion, a low 17% of its market capitalization.
Otis trades at 22.5 times the analyst estimate for 2024 earnings per share of $3.85. Otis is clearly one of the top stock picks you should pick up soon.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
