Worried about the recent market volatility surrounding Europe? Trying to find the perfect mix of dividend, value, and growth stocks for your retirement? Well, look no further.
This summer, I went in search of the best long-term investments available for my portfolio, picked 10 stocks, then ensured I had $4,000 invested in each of the companies.
Like many Fools, I chose to invest over a minimum three-to-five-year time horizon, so I'm not declaring victory yet. But the portfolio's performance so far has me feeling good! Click on the purchase dates listed and you can read my original thesis for investing in each one of these companies.
| Company | Publication Date | Return | Versus S&P 500's Return (percentage points) |
|---|---|---|---|
| 6/26/11 | 24.1% | 25.8 | |
| PriceSmart | 6/28/11 | 35.0% | 38.0 |
| Activision Blizzard (Nasdaq: ATVI) | 7/15/11 | 4.2% | 8.7 |
| Intuitive Surgical (Nasdaq: ISRG) | 7/25/11 | 8.2% | 14.3 |
| National Oilwell Varco (NYSE: NOV) | 7/28/11 | (11.4%) | (7.9) |
| Coca-Cola (NYSE: KO) | 6/21/11 | 2.8% | 5.7 |
| Whole Foods (Nasdaq: WFM) | 7/5/11 | 6.8% | 12.9 |
| Amazon | 7/12/11 | (8.9%) | (4.6) |
| Apple (Nasdaq: AAPL) | 7/30/11 | (3.6%) | (1.2) |
| Johnson & Johnson (NYSE: JNJ) | 8/1/11 | 2.3% | 4.7 |
| Total | 5.95% | 9.64 |
Source: Google Finance, Fool.com. Includes dividend reinvestment.
Though the almost 6% return of the portfolio looks OK on an absolute basis, when compared to the larger market, I'm happy to be leading it by nearly 10 percentage points. Take a deeper dig, and you'll see why I'm even more optimistic on the portfolio's prospects moving forward.
But first, our earnings reports
When I reported last month on this portfolio, three of the 10 companies had yet to report their earnings: Activision Blizzard, Whole Foods, and PriceSmart. We'll start with PriceSmart, which has seen its share prices fall significantly over the past month. That's because the company missed pretty badly on earnings, falling $0.12 per share shy of expectations. I'm not too concerned though, as revenues were up 22%, comps were up 18.9%, and much of the miss was due to lowering prices to attract more customers, and the expenses related to opening up shop in Colombia.
Whole Foods, on the other hand, continued to impress. Net income was up 31%, revenues were up 12%, and the most important metric to keep an eye on -- same-store sales -- were up 8.7%. Though it might not rocket up tomorrow, the long-term thesis for this powerhouse is still well intact.
Finally, Activision did great by most measures, beating on earnings and raising its guidance for the full year. And yet, despite record sales of its Modern Warfare III, shares are down. The likely culprit: a defection in subscribers of the company's online megahit World of Warcraft.
A very promising outlook
Moving forward, I am optimistic about this portfolio's chances for outperformance -- particularly because three of its stocks are beaten down and I don't see that lasting forever.
I'll start with Apple. Of course, we'll have to wait and see what the loss of a visionary like Steve Jobs could mean to the company -- but I don't think that's what has shares down right now. Instead, I think it's due to rumors of a slowdown among its Asian suppliers. As Eric Bleeker points out, we need to take an even approach to these rumors: "Focus ... on the long-term areas that'll drive Apple, like the news that 21% of Chinese consumers are now planning on buying a Mac computer and that Apple is now the most desirable computer brand in the country."
Next we have Amazon. The company has been taking some hits from analysts lately for spending so freely. Not only is it building out its infrastructure, but Amazon's giving away its new Fire tablet basically for free. I agree that in the short term, this could ding the company's balance sheet. But in the long run, I see the company building an impenetrable moat with its distribution centers, and an effective razor and blades model with its Fire.
Finally, we have National Oilwell Varco. It seems to be a perennial underperformer, but in the long run, this doesn't worry me. The company's slogan -- No Other Vendor -- speaks to its ubiquity for anyone trying to extract energy from the earth, whether oil or natural gas. When the global economy begins to stabilize, it'll be crystal clear that we still need these forms of energy, and extractors will surely come calling.
The Fool's top stock for 2012?
Finally, it was with great pleasure that I recently discovered one of the 10 stocks in this portfolio has recently been chosen as The Motley Fool's Top Stock for 2012. To find out which one it is, and get all the details behind our reason, get your copy today; it's absolutely free!
