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James Li
James Li
Articles (1167)  | Author's Website |

4 Profitable and Predictable Stocks to Combat Market Volatility

Stocks to consider as markets wobble on stimulus bill uncertainty

In light of the markets fluctuating between the intraday high and intraday low, four stocks with high profitability and business predictability are Franco-Nevada Corp. (NYSE:FNV), Grand Canyon Education Inc. (NASDAQ:LOPE), Masimo Corp. (NASDAQ:MASI) and Nvidia Corp. (NASDAQ:NVDA) according to the Profitable Predictable Margin Expanders Screen, a Premium screener within our All-in-One Screener.

Dow fluctuates between intraday high and intraday low on Senate stimulus bill uncertainty

On Wednesday, the Dow Jones Industrial Average closed at 21,187.29, up 495.64 points or 2.39% from Tuesday’s close of 20,704.91. Despite this, the 30-stock index traded between an intraday high of 22,019.93 and an intraday low of 20,538.34. The 30-stock index posted a two-day gain of approximately 13%, its first back-to-back gain since posting a four-day win streak from Feb. 3 to Feb. 6.

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Stocks slashed gains around market close when Senator Bernie Sanders announced he was prepared to put the Senate bill on hold “until stronger conditions are imposed on the $500-billion corporate welfare fund.” Earlier on Wednesday, the Senate agreed to a $2 trillion stimulus package to boost the U.S. economy.

To cope with the volatile markets, investors might wish to consider stocks that have shown high profitability and business predictability, key criteria Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) apply for in their investing approach. The Profitable Predictable Margin Expanders Screener looks for companies that have consistently grown revenue and earnings over the past 10 years and increased operating margins at least 5% per year over the past five years.

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Franco-Nevada

Franco-Nevada owns a diversified portfolio of precious metals and royalty streams, which is actively managed to generate revenues from gold, silver and platinum. GuruFocus ranks Franco-Nevada’s financial strength and profitability 8 out of 10 on several positive investing signs, which include a double-digit Altman Z-score, a high Piotroski F-score of 7 and operating margins that are outperforming over 96% of global competitors.

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Gurus with large holdings in Franco-Nevada include Jim Simons (Trades, Portfolio)’ Renaissance Technologies and First Eagle Investment (Trades, Portfolio).

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Grand Canyon Education

Grand Canyon Education offers undergraduate and postgraduate degree programs in business, education, nursing, health and liberal arts. GuruFocus ranks the Phoenix-based company’s financial strength 8 out of 10 on several positive investing signs, which include a solid Altman Z-score of 10.28 and debt ratios that are outperforming over 75% of global competitors.

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Grand Canyon Education’s profitability ranks 9 out of 10 on the heels of margins and returns outperforming over 87% of global competitors.

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Masimo

Masimo focuses on noninvasive patient monitoring. GuruFocus ranks the Irvine, California-based company’s financial strength 9 out of 10 on several positive investing signs, which include robust interest coverage and debt ratios that outperform over 86% of global competitors.

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Masimo’s profitability ranks 9 out of 10 on the heels of margins and returns outperforming over 88% of global competitors.

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Gurus with large holdings in Masimo include Chuck Royce (Trades, Portfolio)’s Royce Investment Partners and Mario Gabelli (Trades, Portfolio).

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Nvidia

Nvidia designs graphics processing units for gaming, data centers and automotive infotainment systems. GuruFocus ranks the Santa Clara, California-based company’s profitability 10 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and margins and returns that are outperforming over 94% of global competitors.

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Gurus with large holdings in Nvidia include Spiros Segalas (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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pjmason14Momentum
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