Over a year ago, I attempted to help family and friends out by creating what I considered an ideal growth portfolio. Throughout 2012, I updated Fools on how these stocks did, and which ones I considered to be exceptional buys.
If, during 2012, you had invested in the S&P 500, you would have returned 15.9%, after factoring in dividends. That's actually outstanding. And yet, had you been invested in the "World's Greatest Growth Portfolio," you would have trounced the S&P 500, earning a 26.5% return on your investment.
Before 2013 began, I decided to review all of the companies to see which ones still made the cut, and which didn't.
The chart below shows how the 2013 portfolio has performed over the first week of the year and, more important, the returns of the portfolio since it started a year ago. Click on any company, and you can read about why it was selected for the portfolio.
Read on and you'll see which three stocks I think are exceptional buys, and at the end I'll offer up access to a special premium report on one company that deserves your attention.
|
Core Company |
Allocation |
Jan. 1 balance |
Current balance |
Change |
|---|---|---|---|---|
|
11.5% |
$115.00 |
$120.29 |
4.6% |
|
|
11.5% |
$115.00 |
$117.65 |
2.3% |
|
|
11.5% |
$115.00 |
$118.45 |
3% |
|
|
11.5% |
$115.00 |
$115.69 |
0.6% |
|
|
Tier One Company |
Allocation |
Jan. 1 balance |
Current balance |
Change |
|
7.5% |
$75.25 |
$77.66 |
3.2% |
|
|
7.5% |
$75.25 |
$76.60 |
1.8% |
|
|
Intuitive Surgical (ISRG -0.55%) |
7.5% |
$75.25 |
$77.28 |
2.7% |
|
IPG Photonics (IPGP 3.14%) |
7.5% |
$75.25 |
$76.45 |
1.6% |
|
Tier Two Company |
Allocation |
Jan. 1 balance |
Current balance |
Change |
|
3D Systems (DDD -0.86%) |
5% |
$50.00 |
$53.35 |
6.7% |
|
5% |
$50.00 |
$49.00 |
(2%) |
|
|
5% |
$50.00 |
$51.05 |
2.1% |
|
|
Westport Innovations (WPRT -3.93%) |
5% |
$50.00 |
$54.85 |
9.7% |
|
5% |
$50.00 |
$49.30 |
(1.4%) |
|
|
|
||||
|
Year-to-date |
$1,000.00 |
$1,037.62 |
3.8% |
|
|
Returns Since Inception |
31% |
Source: Fool.com. Numbers as of market close, Jan. 3, 2013.
Since inception the portfolio has returned 31%, far outpacing the broader S&P 500, which has returned 18.6% over the same time frame.
Lately, big moves by 3D Systems and Westport have helped a great deal. 3D Systems' stock moved up when it announced the acquisition of software company Geomagic. The move will make it easier for 3-D customers to scan objects and turn them into printable products. Westport, on the other hand, is likely benefiting from the fact that Clean Energy Fuels (NASDAQ: CLNE) and Covanta (NYSE: CVA) recently announced they would be partnering to build natural gas fueling stations.
But now, on to the three best buys:
Baidu
I actually just wrote about Baidu yesterday, and called it the market's best buy for 2013. You can read about my full reasoning here, but this is the abbreviated version:
The company has grown revenue and earnings by 80% per year over the last two years, and there are still hundreds of millions of Chinese residents yet to gain access to the Internet, should they so choose.
But Baidu trades for just 18 times expected earnings in 2013. That's due in part to concerns about the SEC investigating auditors in China, and in part to the fact that Qihoo 360 (NYSE: QIHU) seems to be giving Baidu a run for its money in search. In the end, I'm not too concerned about either of these.
IPG Photonics
Next, we have IPG, a company that leads the disruptive field of fiber-optic lasers. These lasers are cheaper, more powerful, and require less energy than their carbon-based counterparts. Heavy industrial companies are using them more and more for welding and cutting large sheets of metal.
And yet, the company is down today because of a downgrade from Stifel Nicolaus. I haven't been able to read the report, but most downgrades for IPG are because of predicted short-term drops in demand, as it is a cyclical industry. While this may be a concern for a day-trader, it opens up opportunities for long-term investors to buy in.
Intuitive Surgical
Famed short-seller Citron Research put out a report on Intuitive Surgical calling it overpriced -- a significant deviation from its normal research, where it exposes fraud in smaller, less-known companies. The report pretty much claimed that the company's da Vinci Robotic Surgical system didn't provide the type of benefits it claimed, and that lawsuits would hurt the company.
As I recently stated:
[W]hen it comes to the efficacy of robotic-assisted surgery, I think the patient's point of view is just as important as the doctor's. Sure, it's important for doctors to monitor how effective da Vinci really is. But if I'm a patient, and I know the da Vinci will produce about the same long-term outcome as a standard procedure but it will be less invasive and require less recovery time, I'm definitely going to choose the da Vinci.
