NEW YORK (TheStreet) -- A prudent portfolio strategy at the beginning of a year is to review your dollar investments in each stock in your portfolio compared to the amount of your original purchases. Positions that gained by 25% to 50% or more over the last 12 months should be pared back to the original amounts putting the excess dollars in the bank. For a stock that declined over the last 12 months but your reasons to own that company remain intact consider dollar-cost-averaging by adding to that position.
Today I provide my buy-and-trade profiles for 18 buy-rated eateries in this strategy also known as portfolio rebalancing. Eight of the 18 gained more than 50% over the last 12 months including the three best performers Buffalo Wild Wings (BWLD) up 92%, Red Robin Gourmet (RRGB) up 91.4% and Sonic (SONC) up 79.9%.
Eateries are in the retail-wholesale sector which is 27% overvalued after gaining 13.6% over the last 12 months with a sector price-earnings ratio elevated at 24.9. The retail-food & restaurant industry is 32.7% overvalued with a gain of 15.8% over the last 12 and a price-to-earnings ratio elevated at 28.3. These are fundamental reasons to rebalance portfolios containing these buy-rated eateries.
Looking at today's table, the column 'OV/UN Valued' shows that Papa John's (PZZA) is 280.7% overvalued, but this could be a fluke on a bad piece of data from the providers used by www.ValuEngine.com. A better observation is that six of the 18 buy-rated eateries are overvalued by a greater percentage than the industry.
The 'VE Rating' column shows that all 18 stocks have '4-Engine' buy ratings according to ValuEngine. Note that a '3-Engine' is a hold rating and a '2-Engine' is a sell rating.
The next column shows that Papa John's is the only decliner over the last 12 months with a loss of 17.7%.