In GuruFocus’ High Quality Low CAPEX model portfolio, the companies with the biggest year-to-date returns are Fortinet Inc. (FTNT, Financial), Nvidia Corp. (NVDA, Financial), Old Dominion Freight Line Inc. (ODFL, Financial), Alphabet Inc. (GOOGL, Financial) and Bio-Techne Corp. (TECH, Financial).
The model portfolio was created at the end of 2020. It tracks the top 20 U.S. stocks that are considered high quality based upon GuruFocus’ All-In-One Screener and operate within industries that require low capital expenditure.
The portfolio was created based upon a $100,000 investment and today has grown to a total value of $133,301.80. This represents a positive return of 33.3% since inception, with only two of the current holdings showing year-to-date losses.
Fortinet
The 33.66 shares of Fortinet (FTNT, Financial) were purchased at an average cost of $148.53 per share. The holding maintains the largest overall value in the portfolio at $11,094.67. The holding is leading the portfolio with a year-to-date gain of 120.41%.
Fortinet is a cybersecurity vendor that sells products, support and services to small and midsize businesses, enterprises and government entities. Its products include unified threat management appliances, firewalls, network security and its security platform, Security Fabric. Services revenue is primarily from FortiGuard security subscriptions and FortiCare technical support. At the end of 2019, products were 37% of revenue and services were 63% of sales. The California-based company sells products worldwide, with the Americas representing 43% of sales in 2019.
On Oct. 29, the stock was trading at $333.08 per share with a market cap of $54.40 billion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 1 out of 10. There are currently no severe warning signs issued for the company, but investors will want to keep an eye on the medium warning signs issued for the company. The company’s strong profitability rank is propped up by operating and net margins that exceed at least 86% of industry competitors.
Top guru shareholders in Fortinet (FTNT, Financial) include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Pioneer Investments, Ray Dalio (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio).
Nvidia
The model portfolio’s Nvidia (NVDA, Financial) position was established with 38.32 shares that were added to the portfolio at a price of $130.55 per share. The position maintains a value of $9,727.15 within the portfolio. Year to date, the holding has gained 91.14% with a total gain of 94.44% since inception.
Nvidia is the leading designer of graphics processing units that enhance the experience on computing platforms. The company's chips are used in a variety of end markets, including high-end PCs for gaming, data centers and automotive infotainment systems. In recent years, the company has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of its graphics processing units.
As of Oct. 29, the stock was trading at $253.84 per share with a market cap of $634.89 billion. The stock is trading at a significantly overvalued rating according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 1 out of 10. There are currently two severe warning signs issued for assets growing faster than revenue and a Sloan ratio indicating poor quality of earnings. The company’s cash-to-debt ratio of 1.54 ranks it lower than 52.67% of industry competitors and is approaching a 10-year low.
Baillie Gifford (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Pioneer Investments and Primecap Management maintain the top guru shareholder positions in Nvidia (NVDA, Financial).
Old Dominion Freight Line
A holding in Old Dominion Freight Line (ODFL, Financial) lands itself as the third-best-performing holding in the model portfolio. The holding consists of 25.62 shares that were added to the portfolio at $195.18 per share. Overall, the holding has a year-to-date gain of 71.95% that easily beats the S&P 500.
Old Dominion Freight Line is the third-largest less-than-truckload carrier in the United States, with more than 240 service centers and 9,200-plus tractors. The company is by far one of the most disciplined and efficient providers in the trucking industry, and its profitability and capital returns stand head and shoulders above its peers. Strategic initiatives revolve around increasing network density through market share gains and maintaining industry-leading service via consistent infrastructure investments.
The stock was trading at $340.94 per share with a market cap of $39.48 billion on Oct. 29. The GF Value Line shows the stock trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 8 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 1 out of 10. There are no severe warnings issued, but the company is approaching 10-year highs across several metrics that investors might want to keep an eye on. Increasing return on invested capital and a decreasing weighted average cost of capital indicates the company is becoming more efficient with its capital.
Gurus that maintain the largest positions in Old Dominion Freight Line include Primecap Management, Pioneer Investments, Jerome Dodson (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and David Rolfe (Trades, Portfolio).
Alphabet
Alphabet (GOOGL, Financial) is the fourth-most-profitable holding of the High Quality Low CAPEX model portfolio. Year to date, the holding has stacked up a 66.43% gain with share prices on the rise. The holding maintains only 2.85 shares, the smallest of any holding, that were added to the portfolio at $1,752.64 per share.
Alphabet is a holding company, with Google, the internet media giant, as a wholly-owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. The company's other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone and smart homes products, which include Nest and Google Home, also contribute to other revenue. Alphabet's moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster Internet access to homes (Google Fiber), self-driving cars (Waymo) and more.
On Oct. 29, the stock was trading at $2,934.53 per share with a market cap of $1.95 trillion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 8 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 3 out of 10. There are currently two severe warning signs issued for the company for a declining gross margin and a declining operating margin. Despite the warning signs, the company maintains an impressive profitability rank as revenue and net income have increased consistently over the past decade.
Alphabet (GOOGL, Financial)’s top guru shareholders include Ken Fisher (Trades, Portfolio), Primecap Management, Pioneer Investments, Spiros Segalas (Trades, Portfolio) and Frank Sands (Trades, Portfolio).
Bio-Techne
Rounding out the list is the portfolio’s Bio-Techne (TECH, Financial) holding. It was established at the beginning of 2021 with the purchase of 15.75 shares that traded at $317.55. Over the course of the year, the holding has gained a respectable 62.56% gain.
Based in Minnesota, Bio-Techne is a life sciences manufacturer supplying consumables and instruments for the pharma, biotech, academic and diagnostic markets. The company reports in two segments, protein sciences (75% of revenue) and diagnostics and genomics (25%). The protein-focused segment makes equipment and associated consumables for protein characterization and analysis and sells antibodies for research and clinical purposes. In diagnostics, Bio-Techne provides controls and calibrators for diagnostic manufacturers and has a portfolio of diagnostic oncology assays.
As of Oct. 29, the stock was trading at $522.04 per share with a market cap of $20.50 billion. The stock is trading at a significantly overvalued rating according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 2 out of 10. There are currently two severe warning signs issued for assets growing faster than revenue and an operating margin in decline. 2020 was a breakout year for the company with record levels of free cash flow and increasing dividend payouts.
Bio-Techne (TECH, Financial) shares are maintained by Ron Baron (Trades, Portfolio), Mairs and Power (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Frank Sands (Trades, Portfolio) and Pioneer Investments.
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