King Henry Stocks
The Tennessee Titans didn’t know what to do with Derrick Henry.
He won pretty much every award there was to win as a running back for the Alabama Crimson Tide. Heisman, National Championship…
Drafted by the Titans in 2016, he left college football as Alabama’s all time rushing leader.
You’d think his resume would make him an obvious “plug and play” running back. But like I said, the Tennessee Titans didn’t know what to do with Derrick Henry. As a rookie, Tennessee gave him the ball 110 times. — less than 7 times a game.
Part of the reason that the Titans didn’t know what they had with Henry had to do with the general groupthink about running backs that was prevalent in the NFL in 2016 (and still is)…
Somewhere along the line, NFL teams decided that it no longer made sense to have a so-called “bell-cow” running back — a guy in the backfield that could run, block and catch passes.
On paper, the “committee” approach to manning an NFL teams backfield sounds pretty good. Instead of one full time guy running the ball and catching passes and a backup to spell him, why not split the duties up? Get a guy that’s good at catching the ball, get a guy that’s good at running the ball, maybe get a really big guy when all you need is to pick up a yard or two…
Plus, running backs get hurt — a lot. In each of the last 10 years, the top-drafted running backs have missed an average of 6 games a season due to injury. So why hitch your team’s success to a guy that, the statistics say, isn’t likely to be there all the time?
And in Derrick Henry’s case, he is a BIG guy. 6’3”, 250 pounds. Conventional wisdom says its easier to hit a big target, therefore injury is even more likely.
The Tennessee Titans traded for veteran free agent DeMarco Murray to lead their backfield the same year they drafted Derrick Henry.
It took an injury (surprise!) to the 29-year old Murray for Henry to really get any playing time. He chalked up 490 rushing yards on the 110 carries he got as a rookie in 2016. 4.5 yards a carry, pretty good…
Henry’s success only led to a more balanced “committee” in 2017. DeMarco Murray ran the ball 184 times to Henry’s 176 carries.
A knee injury at the end of the year pushed Murray into retirement.
“Don’t Go Back to Committee …And Waste Another Year”
After averaging a respectable 4.2 yards a carry splitting time with Murray in 2017, you might think that Tennessee had its bell cow in Derrick Henry.
Nope.
Enamored with the committee approach and craving the versatility that was en vogue , the Tennessee Titans signed 5’8’ 195 lb DIon Lewis to lead their backfield.
Lewis got 16 carries to Henry’s 10 in the first game of the 2018 NFL season. The two basically split carries into Tennessee’s week 8 bye…
Now, NFL teams often use their bye weeks to retool and refocus. So in week 9, when the Titans gave Lewis a whopping 19 carries to Henry’s 6, it was pretty obvious that Tennessee still didn’t know what they had in Derrick Henry and instead, decided to double-down on its commitment to Lewis.
The tide started to turn the very next week, against Lewis’ former team, the New England Patriots. Once again, Lewis was the preferred option for the Tennessee backfield, getting 20 carries to Henry’s 11. But, Henry matched Lewis’ yardage total and scored 2 touchdowns.
Then in Week 16, the tide came all the way in. King Henry got 17 carries and turned them into 238 yards and 4 touchdowns. He averaged 14 yards a carry to Lewis’ 1.3…
And the lightbulb finally turned on for Tennessee.
The next week, Henry ran the ball 33 times for 170 yards and 2 more touchdowns. In the final two games of the 2018 season, Derrick Henry added 177 more yards and another touchdown.
Dion Lewis didn’t run the ball at all in the last game of the 2018 season. The King Henry show had begun.
In 2019, Henry ran the ball 303 times for the Tennessee Titans, putting up 1540 yards and 16 touchdowns.
Then in 2020, Derrick Henry ran right into the record books with 2027 yards and 17 touchdowns. Only 4 running backs in NFL history had ever done better…
So, obviously, now would be a good time to draw some parallels between Derrick Henry’s NFL career and investing. Fortunately for us all, I had a couple things in mind when I started this article…
The King Henry Stocks
The first thing I had in mind concerns the general groupthink about investing. One of the biggest investment groupthink ideas is that a successful portfolio has to be diversified. That is, an investor will be rewarded by spreading his or her money into stocks from a variety of sectors as a way to balance opportunity and protection… a committee approach to investing.
Like owning transportation and oil stocks, for example. Transportation stocks will make you money when the economy is expanding. But there’s always a point where an expanding economy pushes oil demand and prices higher. So oil stocks should fill the gap when higher fuel costs start to eat into the profits for transportation stocks.
That’s just a basic example, and diversifying is not an unreasonable way to look at investing.
The ultimate diversity investment is to simply buy an S&P 500 index fund – a very simple and successful strategy that underpins our entire retirement savings system.
There’s probably not a single asset manager or financial advisor on earth whose head wouldn’t explode if you asked “uh, why not just put it all in Apple?”
Even though there hasn’t been a simpler, safer or more effective strategy from the last 15 years than “put it all on Apple” the Professional Investment World will never tell you to just find a King Henry stock and ride it to glory.
If there was ever a King Henry stock, it’s been Apple, but the groupthink in the investment
So how many King Henry stocks like Apple are there? Stocks that any investor go “all in” on, add shares when you can, and hold for 10 or 15 years?
I’m sure some people would vote Exxon-Mobil (NYSE: XOM). Even with oil demand expected to stagnate sometime in the next 5 years, it’ll be a couple decades before the world can reasonably expect to see demand really contract. Plus, new investment in exploration is certainly going to decline, which puts an oil giant like Exxon in a pretty good spot going forward. Exxon generates $17 billion a year in free cash flow, you can expect that 3.5% dividend to rise.
I’ll nominate Bank of America (NYSE: BAC). Its dominant position in consumer banking isn’t likely to change much. It’s 50% cheaper than JP Morgan (NYSE: JPM) in terms of book value, even though their forward P/Es are similar (9.4 for JPM and 8.5 for BAC). JP Morgan’s not a bad choice for a King Henry stock.
The ability for big techs Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) to execute in both good and bad times is not likely to change anytime soon. The world is more technology driven than ever, and it’s hard to see that changing much. I’d be leery of Nvidia, because the current AI chip boom won’t last forever. The only thing that might keep these from being King Henry stocks is that they are not exactly underappreciated…
Tesla (NASDAQ: TSLA) is a real wild card. Yeah I know its relative dominance in the EV market likely won’t last. But there’s more going on under Tesla’s hood that makes it difficult to evaluate. Like robotics and AI.
I’ve been bearish on Intel (NASDAQ: INTC) for 5 years now, but it looks like it’s actually turning a corner. Don’t forget it makes its own chips and can be a contract manufacturer for other chip companies. The market is likely undervaluing that aspect of Intel, especially given the geopolitics of Taiwan and China. Plus, Intel is apparently the frontrunner to be selected to build and operate a secure facility to make chips for the military. That would be a slam dunk for Intel.
Walmart (NYSE: WMT) is a decent choice as the King Henry of retail. But my Number 1 choice for a King Henry stock is Amazon (NASDAQ: AMZN). Amazon now commands something like 38% of the e-commerce market – that will surely grow. And Amazon Web Services (AWS) will remain a powerhouse, and there’s upside from AWS hosting other companies’ AI applications. The only knock I have in Amazon is its Prime Video service – it sucks.
So that’s my shortlist of King Henry stocks. What’s yours? Do you have a stock or two that may be underappreciated but has the ability to be a true workhorse for the next decade? I’d love to hear what you got, drop me a line with your thoughts and we’ll discuss them in future articles…
That’s it for me today, take care and I’ll talk to you Friday…
Briton Ryle
Chief Investment Strategist
Pro Trader Today
brit.ryle@protradertoday.com
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