By Amy A. Lord, CFA
As a Portfolio Manager I am often asked, “What will the market do next week, next month or next quarter?” My answer is always the same – I have no idea. We don’t believe anyone else does either, not the market strategists on CNBC, or the economists or even the Federal Reserve. There are just too many factors that impact the markets day to day, whether it’s growth forecasts, economic statistics, interest rates or geopolitical tensions. No one has been able to consistently predict market performance over time.
At Suncoast Prosperity Advisors we believe our time is better spent focused on what we can control, building and maintaining a portfolio of high-quality companies with strong fundamentals like free cash flow, high returns on capital and little to no debt. We prefer businesses that are consistently growing their sales, operating margins and earnings regardless of the economic environment. Our Suncoast Equity Management – Disciplined Investment System (SEM-DIS) incorporates all these parameters and has allowed us to outperform the S&P 500 after fees since inception while taking less risk.*
Most of the companies in our Select Growth strategy have recently reported earnings and the average growth rate was more than +25% in 2024, almost double the S&P 500 earnings growth of +13%. Intuit (INTU), Nvidia (NVDA), Fiserv (FI) and Eli Lilly (LLY) reported solid results, to name a few. Our businesses are on track to grow their earnings another +15% in 2025 according to LSEG (Refinitiv Eikon).
As I write this the major market indices are 5-10% off their recent highs and there will likely be more volatility due to tariff announcements, regulatory changes, cost cutting and layoffs. Our portfolio management team takes ownership of their performance and invests their personal wealth alongside our clients. This helps to ensure that our interests are aligned with those of our clients. While we have no idea what the markets will do in 2025 or how our companies’ stock prices will fluctuate, we know that over long periods of time stock prices tend to follow the business results and profitability.
*For the period 12/31/97 – 12/31/24. Risk metric used is standard deviation as calculated by eVestment.
Investment advisory services are offered through Suncoast Equity Management, LLC; a Securities and Exchange Commission Registered Investment Advisor. We will do our best to confirm the accuracy of all information that appears in this newsletter but cannot guarantee accuracy, reliability, or timeliness. All information is provided without guarantee or warranty. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, or services in this newsletter for any purpose. Any reliance you place on such information is therefore strictly at your own risk. Past performance does not guarantee future results.
