Just before 2012 started, a group of family and friends asked me to give them advice on building out the ideal growth portfolio. I split my picks into three groups based on risk: core investments, tier one investments, and riskier tier two investments.
Below, I share with you how the hypothetical portfolio is doing and why it's doing so well, and I'll offer up my three best buys from the group right now.
Read all the way to the end, and I'll throw in access to a special free report about the best growth idea the Fool has right now.
|
Core |
||||
|---|---|---|---|---|
|
Company |
Allocation |
Jan. 1 balance |
March 3 balance |
Change |
| Intuitive Surgical | 11.5% | $115.00 | $146.05 | 27% |
| 11.5% | $115.00 | $107.64 | (6.4%) | |
| Amazon.com | 11.5% | $115.00 | $152.72 | 32.8% |
| Whole Foods | 11.5% | $115.00 | $139.50 | 21.3% |
|
Tier One |
||||
| lululemon athletica | 7.5% | $75.25 | $122.58 | 62.9% |
| Apple | 7.5% | $75.25 | $108.13 | 43.7% |
|
Westport Innovations |
7.5% | $75.25 | $70.81 | (5.9%) |
|
IPG Photonics |
7.5% | $75.25 | $122.51 | 62.8% |
|
Tier Two |
||||
|
Baidu |
5% | $50.00 | $57.30 | 14.6% |
| Zipcar | 5% | $50.00 | $45.55 | (8.9%) |
|
Stratasys |
5% | $50.00 | $85.85 | 71.7% |
|
MAKO Surgical |
5% | $50.00 | $81.05 | 62.1% |
| Solazyme | 5% | $50.00 | $45.20 | (9.6%) |
| Total | 100% | $1,000.00 | $1,284.89 | 28.5% |
Source: Fool.com. Includes reinvested dividends, accurate as of market close on May 1 2012.
Certainly, I have a lot to be happy about when it comes to the portfolio's performance thus far. With the S&P 500 having returned 12.6% since then, this growth portfolio is walloping the market by almost 16 percentage points!
Since last month, several of the companies have been making big moves, but none more so than Stratasys. The company announced in April that it was merging with Israeli-based Objet. The combined company further consolidated the industry into a two-horse race between Stratasys and 3D Systems.
The combined company provides Stratasys with access to 70 international markets where its presence was minimal; it also allows the combined forces to cover more industries than either could previously breach.
Looking forward to the next month, one day I have firmly circled on my calendar is May 7. That's the day that MAKO Surgical reports earnings. As I pointed out last week, the company could be making big moves, as its stock has a sky-high number of shares sold short. Great news could prompt a short squeeze, while disappointing numbers could sink the company.
3 best buys
Even though I believe the two aforementioned companies have bright futures, they didn't make the cut for my best buys for this month. The first company that did make the list is Westport Innovations. The next year will be a crucial one for the company. As competitors try to develop their own natural gas engine designs, Westport's moat and the quality of its intellectual property will be put to the test. The stock is down 37% since late March, and I think the market isn't showing near enough faith that Westport has what it takes to capitalize on its head start in the industry.
Next on the list is Baidu -- otherwise known as the "Google of China." The company announced earnings last month that disappointed the market. It's funny that I used the word "disappointed," as the company grew earnings by 76% and revenue by 75%. For a company with a P/E of 40, those are pretty promising numbers. In reality, bears are worried that the Chinese market will be slowing down. I think that may be true, but over the next 10 years -- with hundreds of millions of Chinese residents yet to come online -- I have no doubt the company will continue to grow both top and bottom lines substantially.
Finally, we have IPG Photonics. I actually called out the company as the latest investment for my Roth IRA here, so I'll give you the Cliffs Notes version. IPG's lasers are on the cusp of overtaking conventional lasers in a number of different markets. The company offers a better, more reliable product for less than competitors charge. That's a winning recipe in my book. Even though shares exploded higher yesterday, I still think the company is a buy.
Our chief Rule Breaker's favorite
The Fool has a name for the type of investing that I'm practicing here: Rule Breaking, or investing in innovative companies that are changing our world. Recently, Fool co-founder and chief Rule Breaker David Gardner sat down to ponder which stock holds the most promise over the coming years.
You can find out which company he picked by reading our latest report: "Discover the Next Rule-Breaking Multibagger." I'll give you a hint and tell you that the stock is actually in the portfolio I revealed above. To find out which one it is, you'll have to get your copy today. It's absolutely free!
