Kip 25

Parnassus Mid Cap’s Bets on Industrials and Tech Take Off

This member of the Kiplinger 25 gained 9.5% over the past 12 months, beating 76% of its peers.

The past year was full of highs and lows in the stock market overall. But for midsize company stocks, 2020 was less extreme. “I would put it smack in the middle,” says Parnassus Mid Cap (PARMX) comanager Matt Gershuny. Over the past 12 months, the fund, a member of the Kiplinger 25, the list of our favorite no-load funds, gained 9.5%. That beat 76% of its peers, but lagged the 10.0% gain in the fund’s benchmark, the Russell Midcap index.

Gershuny and comanager Lori Keith took over at Mid Cap in late 2008, during the financial crisis. The duo have beaten the benchmark since then by investing in growing, well-run midsize firms that pass strenuous environmental, social and governance measures. Mid Cap’s 11.6% annualized return since the pair took over edges the 11.5% av­erage annual gain in the Russell Midcap index. “We keep up in strong markets and do better when markets go down,” says Gershuny.  

Recently, the fund has gained from strong performances in a handful of industrial stocks, including shipping company FedEx (FDX) (up 73% over the past 12 months) and global logistics company Expeditors International (EXPD) (up 16%), which helps get goods to market or to customers. “Shipping capabilities are down on commercial flights, and FedEx and Expeditors have picked up the slack,” says Gershuny.

Tech holdings have shone, too. Shares in Nuance Communications (NUAN), a speech-recognition software firm that’s helping the health care industry shift to electronic clinical records, climbed 112% over the past 12 months.

Shares in Western Digital (WDC) a maker of data storage drives, tumbled 24% over the past year after sales of some products slowed. Oregon utility Portland General Electric (POR) slipped 23% under pressure from the region’s wildfires and a loss in the third quarter. Still, Keith says, both companies have strong long-term growth prospects.

The pair are focused on resilient businesses that will emerge stronger from the pandemic. “Companies investing in research and development, in their workforces, and in technology will gain market share and accelerate growth,” says Keith. An example is waste-collection firm Republic Services, which is enhancing tools on its website and mobile app to improve customer ex­perience.

Most Popular

When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

President Biden and others in Congress are pushing for a third-round of stimulus checks, but it might be a while before we get them.
January 20, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your second stimulus check.
January 18, 2021
20 Best Stocks to Buy for the Joe Biden Presidency
stocks to buy

20 Best Stocks to Buy for the Joe Biden Presidency

Joe Biden has been sworn in as America's 46th president. These are 20 of the best stocks to own under the new administration.
January 20, 2021

Recommended

Stock Market Today 1/22/21: Nasdaq Scratches Out Another Record Finish
Stock Market Today

Stock Market Today 1/22/21: Nasdaq Scratches Out Another Record Finish

The Nasdaq came out of a mixed day with yet another fresh high. More interesting were Friday's moves by IBM, Intel and GameStop.
January 22, 2021
Why GameStop (GME) Stock Has Gone on an Epic Tear
stocks

Why GameStop (GME) Stock Has Gone on an Epic Tear

GameStop has rocketed 2,419% since April. However, recent heat under GME shares has been fueled not just by good news, but also doubters calling it qu…
January 22, 2021
SEC Dings Robinhood for Trading Charges
Business Costs & Regulation

SEC Dings Robinhood for Trading Charges

The complaints are a reminder to investors who pay low or no commissions to investigate more-opaque costs.
January 21, 2021
Stock Market Today 1/21/21: Big Tech Keeps the Rally Moving
Stock Market Today

Stock Market Today 1/21/21: Big Tech Keeps the Rally Moving

While Biden got to work on a number of new COVID-fighting measures Thursday, Wall Street kept its eye on mega-cap technology firms.
January 21, 2021