In the spirit of today's All-Star Game, our own all-star analysts offer a glimpse at their best-performing stocks over the past few years.
As a transplanted Brit living in Canada, I'm not sure I fully comprehend the importance of all-star weekends to Americans. I'm more at home with rugby, the FIFA World Cup, or hockey's Stanley Cup Final, which is the sporting event for Canadians. However, I do understand the spirit behind baseball's special event. So when asked for my four or five all-star investments, I knew exactly who would be on my team.
Best blue chip
My wife and I first bought shares of Canada's largest bank, Royal Bank of Canada (NYSE: RY ) , in 1995, partly to recoup some the bank fees it was charging on our mortgage and personal accounts. The split- and dividend-adjusted price back then was around $6.20 Canadian. We sold our shares and earned a six-bagger over 11 years -- not too shabby for a blue chip. Royal Bank remains on my watch list for a cheaper entry point.
Best mutual fund
Again, I'm back to Canada for Phillips, Hager & North's (Canadian) Dividend Income Fund. And again, I'm more impressed by the long-term returns than by those of just the past five years. The 10-year compounded annual return (about the length of time my wife has owned the fund) is 16.82%, compared with the S&P TSX 60 index return of 11.04%. In 10 years, the minimum contribution of $25,000 turned into $118,334, while the index managed $71,241. That's a staggering outperformance of more than $47,000 in a short period of time. The management expense ratio is 1.18%, which is extremely low for Canada, where most actively managed funds charge 2.3% to 3% for a similar fund.
Best from Inside Value
Inside Value focuses on out-of-favor stocks expected to outperform the market over the long term. In the two years since the newsletter's inception, my best buy (and sell) pick has been Omnicare (NYSE: OCR ) . I recommended it at $29.61 in October 2004 and recommended a sell at $59.61 in November 2005 -- a quick 102% return. Today, Omnicare trades at around $46 and could drop into a buy zone once again.
Best small cap
Back when I used to help out with Motley Fool Hidden Gems, I stumbled upon funeral-home company Alderwoods (Nasdaq: AWGI ) . I bought in to the company at just a little more than $8, after it was first recommended to Hidden Gems members at $7.16 in September 2003. After the turnaround was complete, I sold earlier this year at just less than $17, only to miss the spike up to around $19.50, when the company agreed to be bought out by rival Service Corp. International (NYSE: SCI ) .
In August 2004, MCI, Inside Value's first recommendation, was fresh out of bankruptcy, and investors were shunning the shares. I can't say I blame them. Many had been seriously burned when MCI -- or WorldCom, as it was then known -- plunged into bankruptcy. But that created an opportunity. With a new board, new executives, and significantly less debt, this cash-production machine was attractive at $13.84 a share. Then Verizon (NYSE: VZ ) came knocking with an offer of around $20 per share, and I recommended a sell. Including dividends, that was a quick 50% return in six months. I should have waited as Qwest (NYSE: Q ) decided to enter the bidding. Eventually, Verizon was successful at $26 per share, and I would have scored a 90% gain!
Looking back, I'd say that none of my all-star investments are all that flashy. But maybe that's exactly why they're all-star investments: They simply turned out above-average performance.
Philip Durell is the advisor/analyst ofMotley Fool Inside Value, the Fool newsletter service devoted to practicing the ancient art of value investing. You can see Philip's favorite value stocks for free with a 30-day, no-obligation trial. Inside Value picks are beating the S&P 500 by nearly 3 percentage points since the newsletter's inception. Click here to learn more.
Philip's wife owns units in Phillips Hager & North's (Canadian) Dividend Income Fund. The Motley Fool has a disclosure policy.