2023 Fortuna Advisors Value Leadership Report Reveals Top-Performing Companies and Industries

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Fortuna Advisors LLC

Jan 05, 2023, 10:10 ET

Advanced Micro Devices, Tesla, and Chipotle Mexican Grill among top stocks based on Total Shareholder Return (TSR); Retailing dethrones Semiconductors as top industry group.

PONTE VEDRA BEACH, Fla., Jan. 5, 2023 /PRNewswire/ -- Strategic advisory firm Fortuna Advisors today released its 2023 Value Leadership Report, revealing top performers among the S&P 900 and how they produced superior returns over the last five years. 

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Five-year total shareholder return by industry
Five-year total shareholder return by industry
The median top-quartile S&P 900 company nearly tripled its market value over the five years ending in 2022.
The median top-quartile S&P 900 company nearly tripled its market value over the five years ending in 2022.

  • S&P 900 stocks added nearly $10 trillion in market cap over the five-year period ending in 2022, with the top quartile accounting for over $7 trillion, or 74%. Read more.
  • While past cycles rewarded revenue growth, investors showed a preference for asset-efficient companies and industries over the last two years, which was likely fueled by rising inflation and interest rates. Read more.
  • "Serial Leaders," such as Mastercard, Advanced Micro Devices, and Tesla—despite its recent share price woes—were repeat top performers in consecutive five-year periods; while "Recovery Stars," such as Chipotle Mexican Grill, W.W. Grainger, and Merck & Co., saw their fortunes reverse, rising from bottom- to top-quartile. Read more.
  • Analysis shows traditional performance measures relate poorly to shareholder returns. Read more.

Top-quartile companies created nearly $7 trillion in market capitalization versus $1.6 trillion lost within bottom-quartile companies. The immense gap between quartiles highlights the importance of continuous reallocation of capital and human resources across corporate portfolios to favor promising business and segments.

Fortuna Advisors also examined a comprehensive list of performance measures used in public company compensation plans, finding that an adjusted cash-based measure of economic profit, Residual Cash Earnings (RCE), shows the strongest relationship to TSR. 

"Our goal was to understand how common performance measures relate, and translate, to shareholder returns. The results may surprise you," said Fortuna Advisors CEO Greg Milano.

The report also includes industry analysis. After consecutive years at the top, Semiconductors gave up the lead spot to Retailing. Notable outperformers in 2022 included Energy and non-cyclical industries like Utilities, Food & Staples, Retailing, and Food, Beverage & Tobacco.

"After years of favoring revenue growth, investors seem to have shifted their attention to capital productivity as interest rates and the cost of capital rose, and this benefitted industries like Retailing," said Fortuna Advisors VP, Chris Moore, who led the research.

Fortuna Advisors (fortuna-advisors.com) is a strategic advisory firm that helps clients create value through bold improvements to managerial insights, decisions, and behaviors.

SOURCE Fortuna Advisors LLC

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