Precious metals, emerging markets, inverse the market and bonds continue to be the worst asset classes in which to be invested. They have been cellar dwellers for almost one year now. I only invest in the best asset classes at any given point in time.
I determine the best ones by their short-term, intermediate-term and long-term performance. I also weigh their relative safety.
Data from Best Stocks Now AppOnce I determine that small and mid-cap domestic stocks are a leading asset classs, I break it down even further and check for the leading sectors. The building and construction sector has been a leading sector in the market for about one year. It has sold off some with the recent hike in interest rates, but there are still some good stocks like CoStar within the sector. I determine the best stocks by next requiring three criteria: strong performance, good value and a healthy stock chart. Let's first look at the performance of CoStar Group. The best way to do that is to compare it to the S&P 500: Data from Best Stocks Now App As you can see, the stock has beaten the S&P 500 by a wide margin over the last 10-, five-, three- and one-year periods of time. Obviously, it has not been a straight line, however. When I compare the performance of the stock against the 3,404 stocks that I track, it earns a performance grade of A-. The stock has also beat the market by a wide margin over the last one, three, and 12 months. It also earns a momentum grade of A-. The stocks meets my performance requirements. I am not strictly a performance or momentum investor, however. I started this article with a lesson on valuation. I repeat again, valuation does matter! Let's next take a look at the stocks current valuation: Data from Best Stocks Now App On the surface the stocks looks expensive with a forward PE of 43.3 and a PEG ratio of 2.17. When I apply my five-year valuation formula to the stock however, I can still justify the shares being reasonable price. I come up with a five-year target price of $226 per share which gives the stock 86% upside potential.
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