Running with the bull: for the second straight year, our Hot Stocks pickers trampled the S&P. Will their bullish returns continue?

• Author: Campbell, Spencer
• Position: FEATURE

We're going to charge more for subscriptions if things continue this way. Thirty dollars doesn't seem like fair compensation for the outsized profits our Hot Stocks panel has MOM produced the past two years, when their returns have crushed the S&P 500's. Bobby Edgerton's selections for 2013, for example, posted a 45.2% total average return, and he didn't even win. "I thought I had blown everybody away," Capital Investment Cos.' chief investment officer says. "But, hey, I'll take 45% and let these guys shoot at that all day long."

Every year, we ask professional stock pickers to choose three companies from BUSINESS NORTH CAROLINA'S Top 75, the magazine's annual ranking of the largest public companies headquartered in the state ("Bigger spenders," August 2013). The panelist with the largest average total return--including splits and dividends--over 12 months wins. Last year's premier picker was Larry Carroll. The president of Charlotte-based Carroll Financial Associates Inc. enjoyed Krispy Kreme Doughnuts Inc. on his way to the title, the Winston-Salem-based company's share price nearly tripling during the 12 months that ended Nov. 25.

Edgerton admits his return, nearly 20 percentage points higher than the S&P 500 during the same period, was due to "a little bit of luck, little bit of skill." Fortune favored Harris Teeter Supermarkets Inc., which spiked after Cincinnati-based The Kroger Co. announced it would acquire the Matthews-based grocer in a transaction that valued its stock at 35% more than its starting price. Skill selected Durham-based Cree Inc.--Edgerton liked its financials--and brought home a nearly 75% return. "To me, the most important thing I look at is a company's balance sheet. ... If they have a bunch of cash and little debt, I'm never going to hurt anybody too bad." All five panelists produced returns of greater than 20% last year. Will such prosperity endure 2014? "Boy, that's a tough call," Edgerton admits.

When we asked Frank Jolley, president of Jolley Asset Management LLC, to participate this year, he responded with the question on everybody's mind: "Before I do my picks, will you please tell me whether the Fed will print money for another 12 months?" With the U.S. unemployment...