Back in June, my InvestorPlace colleagues Jeff Reeves, Kyle Woodley and I spent a few hours one day putting together a model portfolio of five stocks that cost no more than a combined $10,000.
The idea was to find stocks that investors could buy without breaking the bank while still accumulating a decent number of shares so that an investor would feel like she had a decent stake for a future portfolio.
It’s now 90 days later, and I must say we did a fine job! Take a look at the results:
|Stock||Ticker||Price @ 4/5/12||Shares||Price @ 9/4/12||Gain/Loss|
The InvestorPlace portfolio gained 10.5% over the 90-day period, beating the S&P 500’s 9.3% gain for that period.
Leading the way for our intrepid group is Goodyear, a favorite of Reeves. Goodyear’s results were highlighted by a solid second-quarter earnings report. Earnings were up in three out of Goodyear’s four business segments; revenue per tire sold was up 8% over last year; tire segment operating income was up $188 million, a record for any quarter; and the end result is a segment and company that’s well ahead of plan for the year. Nice call, Jeff.
Cisco’s stock price move probably had more to do with a 75% increase in its dividend announced just a week after our initial picks. Cisco’s new dividend of 14 cents per share per quarter was a bonus for investors who have generally watched the stock price languish over the year, gaining a paltry 5.3% year to date.
InvestorPlace IPO Playbook Editor Tom Taulli says Cisco’s growth is slowing down, and rivals like Juniper Networks (NASDAQ:JNPR) and even struggling Hewlett-Packard (NYSE:HPQ) are taking market share.
GE is slowly but steadily making headway along each of its business segments. With a dividend now coming up from its revamped GE Capital Corp., the parent company can continue to grow and investors can look forward to increased dividends, too. Second-quarter earnings beat Street estimates, and InvestorPlace’s Dan Burrows sees a rosy picture for the remainder of the year.
In the “not so well” category, both Corning and Alcoa struggled a little, although neither broke the back of our portfolio.
Second-quarter earnings for Corning were generally flat to modestly lower across the board, and weakness in Europe and China helped to slow sales growth and temper future expectations. The good news is that with Corning’s 2.47% dividend yield, investors are at least beating the heck out of Treasury yields.
As for Alcoa, well our Mr. Reeves picked it as one of InvestorPlace‘s 10 Best Stocks for 2012, but it muddled along for the quarter, as aluminum prices continued to drop. Despite increased shipments, the company lost money mostly due its settlement of a lawsuit that resulted in a one-time $75 million charge. The best you can say about Alcoa is that perhaps despite everything, its stock price may have found a floor.
All in all, not a bad start for our portfolio. But there’s one caveat, and it’s a big one: Our theory was based on the idea of not buying just a few shares of one stock and try to hit a home run. Our example of such a swing: Apple (NASDAQ:AAPL).
Wow, that was a mistake: The 18 shares we could’ve purchased on June 6 at $536 each now trade for roughly $670 — a gain of $2,412, or 25%, plus $47 on the dividend.
Nobody’s perfect, right? But we sure left Facebook (NASDAQ:FB) far behind!
We’ll check back in December.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL and GE.