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

Considering how volatile of a week it was, I'm pleased overall that the Basic Needs portfolio was able to perform in line with the S&P 500. As always, this isn't a week-to-week competition, but rather a marathon. Thus far the dividends have really made a difference, canceling out our commissions and boosting the portfolio's value beyond that of the S&P 500's performance, at least for the time being.

The big news this week had to do with first-quarter earnings reports -- and let's just say there were plenty to choose from!

Filthy good results
On Thursday, refuse and recycling giant Waste Management (NYSE:WM) dazzled Wall Street with a better-than-expected first-quarter report. For the quarter, Waste Management delivered revenue of $3.4 billion -- a nearly 2% year-over-year increase -- as its yields increased and its cost decreased. Operating margin also increased 140 basis from its adjusted Q1 2013 results and yielded an adjusted profit of $0.49, up nicely from the adjusted $0.40 in EPS reported last year. By comparison, Wall Street was anticipating just $0.44 in EPS on $3.41 billion in revenue.

Weak commodity prices look as if they'll continue to pressure Waste Management's recycling business in the interim, but it's clear that its operating efficiency is improving, and its refuse-service pricing power remains top-notch.

Home is where the profits are
After the closing bell on Wednesday, residential REIT AvalonBay Communities (NYSE:AVB) delivered results that were more or less in line with the Street's forecasts. For the first quarter, AvalonBay reported a 73% increase in EPS to $1.09 per share and, more importantly, a 110.3% boost to funds from operations. As the company notes, if adjusted for nonroutine items, this year-over-year increase was a more pedestrian but still solid 7.9%. With the exception of the Mid-Atlantic region, where rents fell 0.1%, rental revenue rose in all regions and totaled a 3.8% increase compared to Q1 2013. Economic occupancy dipped a slight 0.1%, but that was more than made up for with higher rental rates.

Looking ahead, AvalonBay forecast second-quarter funds from operations of $1.62-$1.66 per share, which is in line with its first-quarter results. With interest rates likely to rise over the coming years as the Fed cuts back on QE3, AvalonBay's rental pricing power should only increase.

Turning the tide
Early Wednesday morning, consumer goods giant Procter & Gamble (NYSE:PG) delivered another steady quarter of growth with its third-quarter report, signaling that A. G. Lafley's refocusing of the company remains on track. Overall, EPS jumped 5% to $1.04 while organic sales growth improved 3% on net sales of $20.6 billion. But as with most multinationals, Procter & Gamble's results were hurt by negative currency conversions.

For P&G, its fabric care and home care segment provided the biggest boost with a 6% increase in organic volume, followed by health care and grooming, which each grew by 2%. A moderate component to P&G's success was the ability to pass along price increases to consumers, and it looks as if the company is ready to exploit its emerging market growth by raising prices there as well. I can't blame Lafley for focusing on basic-needs price points to drive profits higher. I suspect it will successfully push P&G's profits even higher, but only time will tell.

In addition, P&G went ex-dividend this week with a freshly raised $0.6436-per-share payout -- a 7% increase from its previous dividend. This dividend will be headed shareholders' way on May 15 and marks the 58th consecutive year that P&G has boosted its payout.

A quarterly misfire
Even Wall Street's darlings have off days, and automaker Ford (NYSE:F) certainly had one on Friday when it reported disappointing first-quarter results. During the quarter, profit fell 39% from $1.64 billion, or $0.41 per share in the prior year, to just $989 million, or $0.24 per share. Revenue rose modestly to $35.9 billion, while worldwide unit sales jump notably by 6% to 1.6 million vehicles.

Investors had been warned by previous earnings updates that Ford's profits were likely to stall this year as it introduced a bevy of new models at home and overseas. These new models will likely fuel Ford's growth throughout the rest of the decade, but it means higher advertising and marketing costs up front. Despite the slump, I'd suggest using this dip to get in on the stock, as Ford's market-share gains in China and Europe, coupled with its innovative capacity, make it particularly attractive to long-term investors.

Guilty by association
Lastly, payment-processing facilitator MasterCard (NYSE:MA) was beaten up by investors on Friday after rival Visa reported its quarterly results. Although Visa's net income increased 26% from the year-ago quarter, it was forced to guide its full-year revenue to the low-end of its previous guidance, reflecting concerns that political tensions in Russia could weaken its overseas growth prospects. Because Visa and MasterCard tend to grow in tandem, investors were privy to what they might expect when MasterCard reports. While there could indeed be some short-term implications from sanctions against Russia, my personal opinion that MasterCard can grow by double digits through the remainder of this decade remains unchanged.