Intel Has a Mixed Quarter, MasterCard Goes Shopping, and Ford Hits the Fast Lane

A three-year-long experiment intent on showing that life's most basic needs can result in market-beating portfolio gains, hefty dividend income, and a good night's sleep!

Apr 21, 2014 at 6:05PM

In May, I announced my intention to create a portfolio that embodied life's basic needs. To that end, over a period of 10 weeks, I detailed 10 diverse companies that I think will outperform the broad-based S&P 500 over a three-year period because of their ability to outperform in both bull markets and bear markets, as well as their incredible pricing power in nearly any economic environment.

If you'd like a closer look at my reasoning behind each selection, just click on any, or all, of the following portfolio components:

Let's look at how our portfolio of basic-needs stocks has fared since we began this experiment.


Cost Basis


Total Value


Waste Management 










NextEra Energy 















Select Medical










American Water Works





Procter & Gamble 





AvalonBay Communities









Dividends receivable




Total commission




Original Investment




Total portfolio value




S&P 500 performance



Performance relative to S&P 500



Source: Yahoo! Finance, author's calculations.

It was good news all the way around during the holiday-shortened week, with the S&P 500 up all four days and the Basic Needs portfolio nearly keeping pace. The S&P 500 bested the Basic Needs portfolio by 0.1% ahead of Good Friday, but I'm certainly not going to complain about a whopping 2.8% weekly gain with these generally low-beta stocks.

As has been the case in the past couple weeks we had a significant amount of news-driven events. Per the norm, let's start off with our latest dividend payout.

Show me the money!
No portfolio companies went ex-dividend for the week, but we did receive $1.16 for each share of AvalonBay Communities (NYSE:AVB) that we owned on Tax Day, April 15. This stipend was bumped up 8.4% from the previous payout and speaks to the high occupancy rates and incredible pricing power that community rental property REITs possess at the moment. It's been my position that as the Federal Reserve's quantitative easing effort slowly winds down fewer long-term Treasury purchases might lead to a rise in lending rates. That could further boost residential REIT pricing power as it sends on-the-edge prospective homebuyers back into renting. AvalonBay may not be the best portfolio performer to this point, but I suspect it's soon going to turn that corner.

Can Ford do no wrong?
With the exception of its part in the auto industry's recall mania, can Ford (NYSE:F) do no wrong? On Tuesday, the automaker reported its 10th straight month of sales growth in Europe, where unit sales improved 12% and its market share rose 0.2%, to 8.9%, in March. The company's commercial-vehicle market share rose to an even more robust 10.4%. As Europe's economy continues to stabilize, Ford's fuel-efficient vehicles appear to be attracting quite a bit of attention.  

But that wasn't all. Ford also officially launched its Lincoln line in China in an effort to add geographic diversity to the luxury brand and to attract a rising class of middle and upper-class consumers in the country. Ford announced that Lincoln by 2016 will sell five separate vehicles in China, including the MKZ and the full-size Navigator SUV.  

And let's not forget that Ford also just unveiled its 50th anniversary Mustang, of which only 1,964 will be sold. The Mustang is an icon of the auto industry and Ford's heritage, and the 50th anniversary could generate enough emotional attachment to boost Mustang sales in 2014.

MasterCard goes shopping
For once it was payment facilitator MasterCard (NYSE:MA) and not consumers that went shopping this past week. On Wednesday, MasterCard announced the acquisition of Australia-based Pinpoint, a loyalty and rewards service company to financial institutions in the Asia-Pacific. The move allows MasterCard even more opportunity to reach merchants and customers in a high-growth region. Terms of the deal were not disclosed in MasterCard's press release. Given its recent debt offering, I would look for MasterCard to make a number of deals, or perhaps one large deal, in the coming quarters.

Intel's earnings get chippy
Last week was also the big kickoff to earning season for the Basic Needs portfolio, with chipmaker Intel (NASDAQ:INTC) delivering weaker, but still better-than-expected, first-quarter results. Revenue grew by 1% to $12.8 billion, while earnings per share dipped 5% to $0.38. As per the norm, Intel blamed a slowdown in PC sales for its challenging results, but it also struggled mightily in the mobile realm, winning some victories with tablets but seeing no such luck in smartphones. Fool Ashraf Eassa noted that PC partner Acer is kissing Intel's processors goodbye in its smartphones.

The good news is Intel's forecast for the second quarter was right on track with Wall Street's expectations, and that next-generation cloud hardware sales are strong. In other words, this was another much ado about nothing quarter. As long as Intel's cash flow remains strong there's little reason it's whopper of a dividend won't continue to attract all breeds of investors.

Let's get macro
Lastly, while there was no direct news on integrated oil and gas giant Chevron (NYSE:CVX) last week, it is worth noting that West Texas Intermediate oil prices (with the exception of a two-day pop and drop in March) are at their highest levels since September. Higher prices could mean more pain for Chevron's refineries, but it is great news for the company's much larger exploration and production segment. Chevron is in no way out of the doghouse with shareholders after a couple dismal quarterly reports, but a deal with YPF followed by significantly higher WTI prices may set the company up for an ongoing rebound.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends, Ford, Intel, MasterCard, and Waste Management. It also recommends Chevron and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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