We have been looking at what might make up part of a long-term investment portfolio. With the current turbulence, investors may have to be more active than they want because long-term rules may no longer apply. Given that, we are looking at ideas that may have some merit in the shorter term.
Austin Smith of the Motley Fool Gives three stocks that he believes will do well in 2012 and beyond.
SUPERVALU (SVU) is cheap and has much upside potential. It's currently trading at a forward P/E of just 5.9, despite slightly lower revised guidance. SVU is also diversified; collecting 22% of its revenue from grocery distribution. It also boasts a 4.7% dividend yield. An interesting selection but with some risk.
Las Vegas Sands (LVS) is becoming the go-to maestro of international gaming with a track record of opening casinos in a variety of geographic regions. Trading at just 17 times forward earnings, LVS is cheap for a company that accelerated EBIT growth to 58% over last year, up from an impressive 37% average over the past five years. With worldwide distribution, this also looks like an interesting bet -- if you don't mind the product.
eBay (EBAY) is much more than the online marketplace as its greatest value lies in its PayPal acquisition. PayPal comprises 37% of eBay's revenue, up from 28% in 2008.
We will see how they measure up to our dividend ETF benchmark.
|Asset||Fund in this portfolio|
|REAL ESTATE||(ICF) iShares Cohen & Steers Realty Majors|
|FIXED INCOME||(TIP) iShares Barclays TIPS Bond|
|Emerging Market||(VWO) Vanguard Emerging Markets Stock ETF|
|US EQUITY||(DVY) iShares Dow Jones Select Dividend Index|
|US EQUITY||(VIG) Vanguard Dividend Appreciation ETF|
|INTERNATIONAL EQUITY||(IDV) iShares Dow Jones Intl Select Div Idx|
|High Yield Bond||(HYG) iShares iBoxx $ High Yield Corporate Bd|
|INTERNATIONAL BONDS||(EMB) iShares JPMorgan USD Emerg Markets Bond|
- 3 Top Stocks for 2012 and Beyond -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
|Portfolio/Fund Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Tactical Asset Allocation Moderate||1%||5%||9%||70%||8%||57%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||-1%||-4%||14%||80%||2%||6%|
|3 Top Stocks for 2012 and Beyond||-0%||-1%||28%||74%||-13%||-32%|
This chart gives a very volatile picture, which is to be expected with only three selections. However, a five year -13% drop is not encouraging.
Three Month Chart One Year Chart Three Year Chart Five Year Chart
The charts are very interesting in terms of volatility. Interesting may not be quite the right word -- it's the sort of interesting that I would like to avoid.
|Fund in this portfolio||Percentage|
|SVU (SUPERVALU Inc.)||10.75%|
|LVS (Las Vegas Sands Corp.)||50.90%|
|EBAY (eBay Inc.)||38.34%|
You can see that LVS is the best performer followed by EBAY. Intuitively, I would expect LVS will do well as people tend to head to gaming as a relief to the stress around. Personally I put this into a category of investment I would avoid. I think that PayPal is the jewel in EBAY's crown and I would avoid Supervalu as I don't know enough about it.
I would give this selection a pretty wide berth.
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.