Truly successful investing means taking a long-term approach. No, that doesn't mean weeks or months. It means years and decades.
In an effort to help force myself to take such an approach, I publicly picked 10 companies last summer that I would be investing more than $40,000 in. I vowed to hold these 10 companies for at least three years, or else make a donation to charity if I sold too soon.
It's been about nine months since I made that first purchase. Below, you'll see how the portfolio is performing, why it's doing so well, and three companies I think are great buys right now. Read all the way to the end, and I'll give you access to a report on the three stocks that'll help you retire rich.
vs. S&P 500 (percentage points)
|June 26, 2011||32.8%||21|
|PriceSmart (Nasdaq: PSMT )||June 28, 2011||45.5%||35|
|Activision Blizzard (Nasdaq: ATVI )||July 15, 2011||9.1%||1|
|Intuitive Surgical||July 25, 2011||35.1%||28|
|National Oilwell Varco (NYSE: NOV )||July 28, 2011||(1.7%)||(12)|
|Coca-Cola||June 21, 2011||14.1%||4|
|Whole Foods||July 5, 2011||30.8%||24|
|Amazon (Nasdaq: AMZN )||July 12, 2011||(4.1%)||(13)|
|Apple (Nasdaq: AAPL )||July 30, 2011||78.6%||70|
|Johnson & Johnson||Aug. 1, 2011||5.1%||(6)|
Source: Fool.com. All returns accurate as of March 30 market close. Includes dividends reinvested.
To say that I'm pleased with these results would be a gross understatement. Though it's only been nine months -- and I'm investing with a minimum three-year horizon here -- this retirement portfolio is absolutely walloping the S&P 500!
Much of that outperformance can be traced back to the performance of Apple over the past month. With the successful launch of the new iPad and the announcement of both a dividend and share buyback, the company's stock was up 10% in March alone.
The other company that's helped push things higher lately is PriceSmart. The "Costco of Latin America" has excited investors with impressive growth in same-store sales and expansion into South America. Keep an eye on announcements from the company after the market closes today, as it's expected to announce earnings of $0.69, an increase of 15% from last year.
Three best buys
But although these are two excellent companies by their own right, they aren't my best buys for your money right now.
First on my list is National Oilwell Varco. Think of this company as the pick and axe vendor during the gold rush; it provides everything necessary to extract energy (oil or natural gas) from the earth. The global economy is growing, and that means we'll need more energy. This stock won't shoot up fast, as economic growth and oil prices have feedback loops that play off of one another. But the long-term trend is undeniable: It's worth having NOV in your portfolio.
Here's some amazing news for disgruntled Activision Blizzard shareholders: Your shares have outperformed the S&P 500 by almost 10% over the past year. That may be tough to believe, as shares have traded in an awfully tight range for the past three years. But I think we'll eventually see a breakout, starting with the company's May 15 release of Diablo III. Coupled with the fact that the company is switching over to digital content delivery, and the fact that it's trading for just 12 times future earnings, it's a buy today.
Finally, we have Amazon. You have to be patient with this company, as CEO Jeff Bezos is willing to play the super-long game. As he states, "If everything you do needs to work on a three-year time horizon, then you're competing against a lot of people. But if you're willing to invest on a seven-year time horizon, you're now competing against a fraction of those people, because very few companies are willing to do that."
I believe Amazon will be the alpha provider of goods in the future. With a market cap of about $91 billion today, I think there are still miles of room for growth here. (Wal-Mart, for comparison, is over twice as large.) Regardless of the high P/E -- which I see as misleading -- everyone needs shares of Amazon in their portfolio, and today's price is a fair one.
Three stocks to retire rich?
Of course, here at the Fool, we love getting different opinions. Our top analysts have put together a special free report: "3 Stocks That Will Help You Retire Rich." It just so happens that one of my best buys made their list. To find out which one -- and get the name of the other two companies -- get your copy of the report today, absolutely free!