Covestor model manager Czar Reyes developed Only the Best with the goal of creating a model filled with excellent businesses purchased at fair prices. He uses a value approach and his goal for the model is to own shares of between 11 and 20 businesses.
Let’s take a look at two of the top positions in this portfolio.
Pre-Paid Legal Services Inc (NYSE: PPD) offers prepaid legal services to members for a small fee per month. On their website, they liken their memberships to an HMO insurance plan. Members pay their fees and PPD finds a lawyer from their network who can assist them with their planning needs.
PPD has a relatively low price to earnings ratio, which means this it is likely not overbought. Their net revenues fell slightly in 2009 but showed steady growth over the prior three years. Their earnings per share were unchanged from the prior year.
TJX Companies Inc (NYSE: TJX) is a discount retailer with everything from men’s clothing to home furnishings in its wide range of available products. The company specializes in selling irregular or discontinued name brand and designer items normally found in high-end stores, but at a much lower price. Their price to earnings ratio is lower than many of their competitors and the economic crisis has served them the perfect financial environment to increase their earnings, as is evidenced by their steady rise in net revenues and gross income from 2007 to 2010. Their earnings per share has also increased and their net income had a substantial gain in 2010. Their stock price experienced a serious dip in November 2008, but as its current price illustrates ($41.68 as of August 6, 2010) TJX has more than recovered.
