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Nov 4, 2019

Ten Stingy Stocks For 2020

by Norm Rothery

The Stingy Stock strategy aims to beat the S&P 500 by picking value stocks from within the index itself. It uses a strict numbers-based approach that has performed well over the long term.

But last year wasn’t great for the Stingy Stocks or for value stocks more generally. The Stingy Stocks gained a fraction of a percent since my last update, which rounded down to a 0.0% return. By way of comparison the S&P 500, as represented by the SPDR S&P 500 ETF (SPY), advanced by 3.2% over the same period. That’s a point for the index, which beat the Stingy Stocks in 7 of the last 18 outings.

But, over the long term, the Stingy Stocks gained an average of 15.3% per year since the portfolio began at the end of 2001. By way of comparison, the S&P 500 ETF climbed 7.5% per year over the same period. The Stingy Stocks outperformed the index by an average of 7.8 percentage points annually.

To put that into perspective, if you had split $100,000 equally among the original Stingy Stocks at the end of 2001 and moved into the new stocks each year, your portfolio would now be worth about $1,242,000. On the other hand, an investment in the index ETF would be worth about $358,000.

You can see the full performance record in the accompanying table. But be aware that the returns do not include commissions or other trading frictions. They do include dividends, which are reinvested roughly annually when each year’s stocks are selected.

The Stingy Stock method starts its hunt for good value stocks with the companies in the venerable S&P 500 index. The index contains some of the largest businesses in the U.S., which tend to be more stable than smaller firms.

Stingy Stocks


Continuing the safety theme, the method narrows in on firms that have some earnings and some cash flows over the last year. After all, a business is less likely to go bankrupt when it is profitable and has cash coming in the door.

After putting a few safety factors in place, it’s time to hunt for bargains. The method does so by picking stocks with price-to-sales ratios of less than one. Preference is then given to stocks with modest price-to-earnings ratios. I’ve also added a few secret ingredients to the mix.

Crunching the numbers yields the 10 Stingy Stocks for the year. They are: American Airlines (AAL), General Motors (GM), HollyFrontier (HFC), International Paper (IP), MetLife (MET), Nucor (NUE), Prudential Financial (PRU), United Airlines (UAL), Unum Group (UNM), and Xerox (XRX).

The Stingy Stock portfolio was refreshed on September 27, 2019 when it sported an average price-to-sales ratio of 0.5, an average price-to-earnings ratio of 8.8, and an average dividend yield of 3.1%.

As always, before buying any stock, do your own due diligence. Make sure the situation hasn’t changed in some important way. Read the latest press releases and regulatory filings. Scan news stories for any important developments and make sure it’s a good fit for your portfolio. Be careful out there.


Norman Rothery, PhD, CFA, Founder of, Toronto, ON (416) 243-9580,,