There are lots of reasons that people put money into the stock market, but none of them is more prevalent than to save up for retirement. Countless studies have shown that, with a decades-long timeline, there is no wealth generator quite like the stock market.
Knowing that, I set out this summer to identify 10 stocks that I'd be putting my money into. I'm so confident that these 10 stocks will beat the market over the next 10 years, I've committed more than $40,000 of my own money to them; and I will donate money to charity if I sell any of them in less than three years.
A check on performance
If you'd like to see how these stocks have held up during this tough summer, take a look below. By clicking on the publication date, you can see my original investing thesis for each stock.
Price at Publication
Versus S&P 500
|Google (Nasdaq: GOOG )||June 26, 2011||$474.88||$522.18||10%||18%|
|PriceSmart (Nasdaq: PSMT )||June 28, 2011||$50.53||$63.81||26%||36%|
|Activision Blizzard (Nasdaq: ATVI )||July 15, 2011||$11.91||$11.54||(3%)||8%|
|Intuitive Surgical (Nasdaq: ISRG )||July 25, 2011||$400.99||$376.81||(6%)||7%|
|National Oilwell Varco (NYSE: NOV )||July 28, 2011||$81.25||$63.68||(22%)||(11%)|
|Coca-Cola (NYSE: KO )||June 21, 2011||$66.26||$69.43||5%||15%|
|Whole Foods (Nasdaq: WFM )||July 5, 2011||$63.82||$64.53||1%||14%|
|Amazon (Nasdaq: AMZN )||July 12, 2011||$211.23||$216.18||2%||14%|
|Apple (Nasdaq: AAPL )||July 30, 2011||$390.48||$379.74||(3%)||7%|
|Johnson & Johnson (NYSE: JNJ )||Aug. 1, 2011||$64.41||$64.64||0%||10%|
Source: Google finance. Prices accurate as of market close Sept. 2.
Though an investment in these companies has only yielded a small profit, it is beating the market by a remarkable 11%. In fact, only one of the 10 companies -- National Oilwell -- is losing to the market so far. When the market swoons, the lowest quality companies are usually hit the hardest, and these are no low-quality companies.
Of course, as Foolish investors, we put our money in the market with a three- to five-year timeline. I'm not claiming victory until we hit the summer of 2014, but I'm willing to celebrate a good start.
Both PriceSmart and Google have seen their shares rise by double digits. For PriceSmart, I've been pounding the table on them for about eight months. Though the stock is up 65% since then, it still remains a buy in my book. Retirees in the U.S. are likely to see social services dissipate because of budget shortfalls. That combined with rising medical costs stateside and appealing weather in Central America makes PriceSmart a perfect candidate for both booms and busts in the U.S. economy.
Google, on the other hand, has been making waves lately. Not only did it crush analyst estimates last quarter, but it turned more than a few heads with its bold purchase of Motorola Mobility last month.
Holding up well in tough times
Many of the rest of these 10 stocks have held up remarkably well. Given their high valuations, Intuitive Surgical, Whole Foods, and Amazon -- though they suffered some big drops mid-August -- have risen to the top as high-quality growth stocks that investors are still willing to pay up for even when the greater market is faltering.
Activision Blizzard and Apple -- two companies with forward P/Es of just 12.5 and 12.0, respectively -- are two companies that have been showing solid bottom-line growth. Their relatively low valuations seem to have buffeted them from the market downturn. Apple investors, however, must now consider what a Jobs-less future holds for them.
As expected, my two dividend stalwarts -- Coca-Cola and Johnson & Johnson -- held steady in troubled waters and helped buoy my portfolio.
What happened here?
Clearly, if there is one loser so far, it is National Oilwell Varco. Though I'm not one to advocate adding to losers, this looks like a compelling long-term play right now.
Yes, the stock is tied to the price of oil; but to think that the demand for oil worldwide will be going anywhere but up over the next decade seems absolutely ludicrous to me. National Oilwell just received its first order from a long-awaited build-out of drill ships in Brazil. The $1.5 billion deal could be just the beginning of a global upgrade of an aging drilling fleet.
Want more ideas?
Obviously, I'm staying pat with these 10 companies for my retirement portfolio, but that doesn't mean you have to stop here. If you're interested in further investing ideas, check out The Motley Fool's special free report "5 Stocks the Motley Fool Owns, and You Should, Too." Inside, you'll find out about five stocks the Motley Fool has so much faith in, we're putting our money where our mouth is. To download the report today, absolutely free, simply click here.