Every year, I set out to find the most innovative companies with lasting competitive advantages, and put them into “The World’s Greatest Growth Portfolio.”
If, since this portfolio began in January 2012, you had invested $100,000 in the S&P 500, you would be sitting on a gain of $26,800 — not including dividends. But if you would have invested along with me in this growth portfolio, your gains would be quite a bit higher, at $31,500.
Since inception, this portfolio has returned 31.5%, beating the S&P 500 by 4.7 percentage points. Read on to see what happened this month to account the portfolio’s winning ways, and click on any company to see the original buy recommendation.
| Company | Allocation | Jan. 1 Balance | Current Balance | Change |
|---|---|---|---|---|
| Core | ||||
| Baidu (NASDAQ:BIDU) | 11.5% | $115.00 | $99.59 | (13.4%) |
| 11.5% | $115.00 | $133.06 | 15.7% | |
| Amazon.com (NASDAQ:AMZN) | 11.5% | $115.00 | $116.73 | 1.5% |
| Whole Foods Market | 11.5% | $115.00 | $111.32 | (3.2%) |
| Tier One | ||||
| Starbucks (NASDAQ:SBUX) | 7.5% | $75.25 | $84.88 | 12.8% |
| Apple (NASDAQ:AAPL) | 7.5% | $75.25 | $60.58 | (19.5%) |
| 7.5% | $75.25 | $74.42 | (1.1%) | |
| 7.5% | $75.25 | $70.36 | (6.5%) | |
| Tier Two | ||||
| 5% | $50.00 | $50.38 | 0.8% | |
| 5% | $50.00 | $82.65 | 65.3% | |
| 5% | $50.00 | $48.85 | (2.3%) | |
| 5% | $50.00 | $54.95 | 9.9% | |
| lululemon athletica (NASDAQ:LULU) | 5% | $50.00 | $49.20 | (1.6%) |
| Year-to-date | $1,000.00 | $1,036.96 | 4% | |
Source: Google Finance. Prices accurate as of Monday, April 29, 2013.
Here are the five companies that were making headlines this month from the portfolio.
Barring a major product development by the end of the year, I’m thinking that Apple Inc. (NASDAQ:AAPL) will find itself out of this portfolio in 2014. It’s not that the company isn’t still quality, or selling for really cheap. Rather, its because I’m slowly becoming convinced that Steve Jobs represented the sustainable competitive advantage to Apple Inc. (NASDAQ:AAPL)’s innovation dominance.
I’ll concede that the Apple Inc. (NASDAQ:AAPL) ecosystem will do a lot to protect Apple Inc. (NASDAQ:AAPL)’s brand moving forward. But this growth portfolio is specifically for innovation. With its focus on capital return, Apple Inc. (NASDAQ:AAPL) seems to be more focused on being an income play than an innovation one.
Baidu.com, Inc. (ADR) (NASDAQ:BIDU)
The market clearly wasn’t impressed with what Baidu.com, Inc. (ADR) (NASDAQ:BIDU) had to offer in its earnings report. But I saw three nuggets that make me believe China’s largest search engine still has its best days in front of it. Among those reasons:
- The company is investing in where it counts, especially in mobile.
- Its earnings miss eased my crazy-China-fraud fears that numbers were being massaged by management.
- Baidu.com, Inc. (ADR) (NASDAQ:BIDU) continues to add new online marketing partners at a healthy clip.
Amazon.com, Inc. (NASDAQ:AMZN)
In fact, since profit started to dip starting in 2011, the stock is actually up more than 40%. That’s because revenue has ballooned, up almost 80% between 2010 and 2012. Eventually, Amazon.com, Inc. (NASDAQ:AMZN) will ease up on its fulfillment center and technology spending — at least as a percentage of revenues — and when that day comes, both free cash flow and earnings should increase considerably.
Over the long run, Starbucks Corporation (NASDAQ:SBUX) probably has good days ahead of it. It has a top-notch CEO, combined with smart acquisitions domestically that could make it a player in food as well as caffeinated beverages, and the opportunities in China and even India represent huge runways for growth.
The article “The World’s Greatest Growth Portfolio” Continues to Outperform originally appeared on Fool.com is written by Brian Stoffel.
Fool contributor Brian Stoffel owns shares of Apple, Google, Amazon.com, LinkedIn, Starbucks, Baidu, Whole Foods Market, lululemon athletica, Intuitive Surgical, Westport Innovations, Stratasys, and IPG Photonics. The Motley Fool recommends 3D Systems, Amazon.com, Apple, Baidu, Google, Intuitive Surgical, IPG Photonics, LinkedIn, lululemon athletica, Starbucks, Stratasys, Westport Innovations, and Whole Foods Market; owns shares of 3D Systems, Amazon.com, Apple, Baidu, Google, Intuitive Surgical, IPG Photonics, LinkedIn, Starbucks, Stratasys, Westport Innovations, and Whole Foods Market; and has options on 3D Systems.
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