At the end of last year, I recommended seven growth names that I would buy for 2012. Now that we have almost completed two months of the year, it is time to update the performance of these names again. The basis for these names was simple. Their stocks would be bought mostly for growth reasons, and not value ones. While these names may have a small dividend or may be buying back stock currently, none of these names are considered value investments. Here is how the portfolio is doing so far.
|Intuitive Surgical (ISRG)||$463.01||$512.76||$49.75||10.74%|
|Boston Beer (SAM)||$108.56||$99.01||($9.55)||-8.80%|
Now I said when I started this portfolio and at the last update, that I would base the performance on average weights for simplicity. Now yes, if I was buying all of these on my own, I would be choosing different weights for each. In fact, if you asked a group of 100 people, I'm sure that Apple would receive the highest weighting of the seven, which would really boost the portfolio's overall performance, given that it is up the most.
But for simple tracking, equal weights are fine. With equal weights, the portfolio is up 13.76%, which in about two months, seems like an exceptional gain. It is a nice gain, but the markets are up a bit overall. In fact, the benchmark I am using for this portfolio, the iShares Russell 1000 Growth ETF (IWF) is up 11.16% so far this year. That equates to the portfolio beating the benchmark by 2.60%. For two months, that's pretty good. If you annualize that, the portfolio would beat its benchmark by 16%, and that would be very impressive. I've gained another percentage point on the benchmark since the last update.
So why is the portfolio doing so well? Well, Apple is a big reason. Thanks to the blowout earnings report, Apple has soared, and now people are calling for a dividend, which we haven't seen yet, but may in the future. Mastercard also had a great quarter, and despite its slow start to the year, has now taken off. I still stand by my prediction that it will hit $500 this year. Priceline has also soared recently, but I'll caution you that earnings come out this week, so be careful. It's had a huge run. The company usually gives conservative guidance, which could knock down the stock after it reports. Intuitive Surgical also reported a blowout quarter, and after a post-earnings drop, has rallied hard for the last month.
Now the portfolio would be doing a lot better if it wasn't for recent post-earnings drops in Molycorp and Boston Beer. Boston Beer reported a blowout fourth quarters, but investors did not like the guidance the company gave. Molycorp's results were mixed, and it has seemed to sell off after every earnings report recently. Boston Beer lost roughly $5.50 after earnings and Molycorp lost more than $2.25. Imagine where the portfolio would be if these losses had not occurred.
Yes, we are only two months into the new year, but I like the way the portfolio is constructed, and I think it will continue to beat its benchmark. I still think any of the big four (Apple, Mastercard, Intuitive Surgical, Priceline) have a chance at a stock split this year, and if that occurs, these names will go much higher. If we get a market selloff, these names could be tested, but I don't see any reason why they won't rebound quickly.