Picks From The Pros

We Asked Some Savvy Mutual Fund Managers, Who Have Proved They Can Outsmart The Market, To Share Their Favorite Stocks.

NOT MANY STOCK PICKERS can beat the market—or even match it. But those who do often have some things in common: experience; a methodical, disciplined approach; and a knack for seeing value in places others have overlooked. That’s why—assuming you’re one of those investors who won’t settle for the approach we usually recommend, an index fund—we think you might have something to learn from them.

With that in mind, we brought together managers of four such funds—two focused on the U.S. and two that look abroad—to better understand how they think. In the following pages, you’ll read about some of their favorite picks for 2019 (and beyond) and, perhaps more important, how they arrive at their decisions.

JOHN HANCOCK BLUE CHIP GROWTH

SINCE THIS FUND’S launch 13 years ago, manager Larry Puglia has always focused on the longer-term impact of a company’s decisions, typically looking out at least five years. Because of this central tenet, consistent free cash flow has become one of his key valuation tools. It has proved to be “predictive of stock performance,” Puglia says, since it’s more difficult to manipulate than other numbers that companies report.

With this long-term mindset, he prefers to see company executives reinvest profits in their businesses by spending heavily on research and development, as opposed to making short-term efforts to boost the stock price, like drastically cutting costs to boost profit margins. Puglia says his commitment to R&D has only deepened in recent years, as the pace of technological disruption has increased. He has owned Amazon, for example, since 2005 because of its disruptive nature (it’s not uncommon for Puglia to hold companies for decades).