Barron’s Stock Picks Beat the Market Again Last Year. Here’s How We

On Jan 22, 2021

Barron’s picked stocks that beat a red-hot market in 2020—and we didn’t even choose Tesla.

In a year of turmoil and hardship, as the pandemic throttled the economy, the stock market persevered, with the

S&P 500

index rising 16%. Some overseas markets did even better.

Stocks that were highlighted in bullish Barron’s articles had a total return of 24.7% from the last trading day before publication through the end of the year, versus 20.4% for the benchmarks they are tracked against. It was the second straight year that we beat the benchmarks, after a three-year drought.

That said, Barron’s didn’t do as well with its bearish picks. On average, those rose more than their benchmarks, meaning that investors who avoided stocks based on our reporting might have missed out on gains—or if they shorted the stocks, they might have lost money.

Barron’s tracks the performance of stock picks every year in an attempt at accountability. It’s an imperfect process, but one that hopefully shows where we have succeeded and where we can improve. We track only articles that chose three stocks or fewer, so that larger sector bets aren’t part of the tally. And the stocks chosen in columns like Tech Trader aren’t included, either.

If Barron’s writers change their opinion on a stock in a follow-up, the gain or loss is locked in on the date of the follow-up, similar to when an investor decides to liquidate a position. As for benchmarks, we track large-caps against the S&P 500, mid-caps against the

S&P MidCap 400,

and small-caps against the

Russell 2000.

Although we missed

Tesla

(ticker: TSLA), which rose 743% in 2020, Barron’s found some special situations that paid off handsomely for investors.

In April, Andrew Bary wrote about the two companies that had spun off from

United Technologies

—

Carrier Global

(CARR) and

Otis Worldwide

(OTIS)—and the company that emerged from the merger,

Raytheon Technologies

(RTX). The first two of those stocks had enormous gains through the end of the year. Carrier, which makes air-conditioning and heating systems, returned 177% through the end of the year. Its products have become crucial for transporting the Covid-19 vaccine produced by

Pfizer

(PFE) and

BioNTech

(BNTX), which must be kept in extremely cold temperatures.

Otis, an elevator maker, has profited from the success of its services business, which accounts for about 80% of earnings. Its stock has returned 48%.

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(BYD) more than doubled after Barron’s recommended the gambling stock in…