Star Performers of the 1st Quarter

Despite several headwinds, the first quarter of 2014 has ended on a positive note for benchmarks. Dismal Chinese data and the Crimean crisis which followed were major negatives during the period. Certain positive economic reports provided the impetus markets needed at this time. Ultimately, investors overcame the diffidence which had gripped them in January and indices ended the quarter on a positive note.

January’s Performance

January was a cruel month for indices. Through the month, emerging market concerns, China’s dismal economic data and the Federal Reserve’s $10 billion cut to monetary stimulus dealt severe blows to the markets.

For January, the blue-chip index plunged 5.3%, S&P 500 was down 3.6% and Nasdaq ended the month with 1.7% decline. This was the blue-chip index’s worst start since 2009.

February’s Performance

The S&P 500 gained 4.3% and the Dow moved up 4% in February, its highest monthly percentage gain since Jan 2013. The Nasdaq jumped 5% for the month, its largest monthly increase since Sep 2013.

Despite several good earnings reports, mixed economic data continued to be a major drag on indices. However, investors chose to focus on the positives on offer, an increase in Chicago PMI and an uptick in University of Michigan’s consumer sentiment reading.

March’s Performance

The S&P 500 rose 0.7% and the Dow gained 0.8% in March. In contrast, the Nasdaq lost 2.5% over the month, its worst performance since Oct 2012. Both the Dow and the S&P 500 rose for a second straight month. Last week, declines in bio-tech stocks had a negative impact on the Nasdaq.

The gains came despite escalating political tension over Crimea, dismal Chinese data and the central bank’s decision to pull back the economic stimulus program. However, the month ended on a positive note after Fed Chair Janet Yellen’s comments allayed concerns about the possibility of a sooner-than-expected hike in interest rates.

Quarterly Performance

Coming to quarterly performance, the S&P 500 and the Nasdaq gained 1.3% and 0.5% respectively. However, the Dow lost 0.7%. The S&P 500 and the Nasdaq experienced their fifth successive quarterly increases. At the same time, these were the smallest quarterly gains for both indices since the fourth quarter of 2012.

3 Star Performers of the First Quarter

I ran a screen on Research Wizard for companies with the following parameters:

(Click here to sign up for a free trial to the Research Wizard today):

1. Percentage price change over the last 12 weeks greater than or equal to 20
2. Forward price-to-earnings Ratios (P/E) for the current financial year (F1) less than or equal to 25%. This picks out stocks that are good value choices
3. Expected earnings growth for the current financial year greater than or equal to 20
4. Zacks Rank less than or equal to 2: This ascertains stocks that have shown above-average returns over the last 26 years.

(See the performance of Zacks’ portfolios and strategies here: About Zacks Performance).

Here are the top 3 stocks among the 42 that made it through this screen:

AVT, Inc.

AVT, Inc. (AVTC) produces, develops and is a vending operator of product dispensing solutions. It also produces food product dispensing and food access equipment. The company opened a new unit targeted at automated micro stores in Jan 2013. In January, AVT disclosed that it had set up an investment fund to acquire Marley Coffee Automated Kiosks

Percentage price gain over the last 12 weeks = 175.2%
Expected earnings growth for FY13-14 = 200%

AVT, Inc. holds a Zacks Rank #2 (Buy). The stock’s forward price-to-earnings Ratios (P/E) for the current financial year (F1) is 24.57.

Smart Technologies Inc.

Smart Technologies Inc. (SMT) is a designer and developer of interactive products and solutions that improve the learning experience. Its principal technology solution offering is an interactive whiteboard product. This enables users to write using digital ink, use computer based applications and log on to the Internet.

Percentage price gain over the last 12 weeks = 97.69%
Expected earnings growth for FY13-14 = 611.1%

Currently the company holds a Zacks Rank #1 (Strong Buy) and has a P/E (F1) of 20.02.

CTPartners Executive Search Inc.

Our third choice is CTPartners Executive Search Inc. (CTP). This executive search company offers its services globally and focuses on recruitment of high level executives, including board members. The company has 15 offices worldwide. CTPartners purchased Sydney based executive search company Johnson Executive Search in Mar 2014.

Percentage price change over the last 12 weeks = 87.83%
Expected earnings growth for FY13-14 = 200%

Apart from a Zacks Rank #2 (Buy), Clayton Williams Energy, Inc. has a P/E (F1) of 22.50.

Quarter’s Momentum Remains

Yellen’s statements indicate that the central bank may step in to provide additional stimulus to the economy if required. This has provided the reassurance investors were looking for and will help to move markets higher in times ahead. The good valuation of these stocks, represented by reasonably low price to earnings ratios, and their strong Zacks Rank make them excellent choices for your portfolios.

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