This year's portfolio will be a small one with an initial investment of $15,000. As with the may 2014 portfolio, I will continue to apply the same principles to this year's may 2015 portfolio. To summarize,
Market Capitalization: the company must be worth over 1 billion dollars
Beta: the volatility of the stock must be less than 1 (any number higher than 1 means that the stock is more volatile).
Earnings Per Share (EPS): A positive EPS means that there is profit allocated to each share.
Return on Equity (ROE): the company's profitability must have had double digit ROE for the current and previous year.
Diversification of the portfolio: stocks must be chosen from different market sectors (ie, they must be in different lines of business).
Some caveats:
I will still be avoiding energy and resource stocks, but I do think that stocks should in the financial sector should make some gains over the next year.
I won't duplicate any stocks held in the may2014 portfolio. (really make things hard for myself!).
The initial value of the stocks will be the closing price on Friday May 29th.
If I like a certain stock, I might overlook that it doesn't fulfill all of the characteristics above.
Commissions will not be factored into the portfolio.
Here are the stocks I have selected for the May 2015 portfolio. There are seven of them:
ATD.B - Alimentation Couche-Tard - A grocery store chain that operates in North America and Europe. The past one year return (May2014 thru May2015) was 64%. Dividend yield is inconsequential.
Key stats and ratios
Q1 (Feb '15) 2014
Net profit margin 2.72% 2.14%
Operating margin 4.22% 2.72%
EBITD margin - 4.14%
Return on average assets 8.50% 7.70%
Return on average equity 20.00% 22.60%
Employees 60,000 -
DH - Davis and Henderson - A financial technology provider operating in Canada and the US. One year return is 24%. Dividend yield is 3.14%.
Key stats and ratios
Q1 (Mar '15) 2014
Net profit margin 11.52% 9.42%
Operating margin 17.47% 15.66%
EBITD margin - 29.43%
Return on average assets 4.33% 3.59%
Return on average equity 9.41% 8.44%
Employees 4,000 -
EMA - Emera - An energy company operating in North America and the Carribean. One year return is 21%. Dividend yield is 3.88%.
Key stats and ratios
Q1 (Mar '15) 2014
Net profit margin 19.34% 15.24%
Operating margin 25.78% 22.45%
EBITD margin - 33.94%
Return on average assets 6.97% 4.84%
Return on average equity 22.64% 17.00%
Employees 3,530
NA - National Bank of Canada - A Canadian financial services provider. One year return was 4%. Dividend yield is 4.29%.
Key stats and ratios
Q2 (Apr '15) 2014
Net profit margin 28.43% 28.15%
Operating margin 30.12% 33.55%
EBITD margin - 51.63%
Return on average assets 0.77% 0.78%
Return on average equity 17.18% 17.89%
Employees 20,125
SJ - Stella Jones - A U.S. based manufacturer and marketer of pressure treated wood products. One year return was 49%. Dividend yield is inconsequential.
Key stats and ratios
Q1 (Mar '15) 2014
Net profit margin 8.84% 8.31%
Operating margin 13.99% 12.46%
EBITD margin - 13.98%
Return on average assets 8.84% 8.80%
Return on average equity 16.59% 16.43%
Employees 1,560
T- Telus - A Canadian telecommunications provider. One year return was just under 2%. Dividend yield is 3.97%.
Key stats and ratios
Q1 (Mar '15) 2014
Net profit margin 13.72% 11.89%
Operating margin 22.45% 19.88%
EBITD margin - 35.48%
Return on average assets 6.86% 6.36%
Return on average equity 22.00% 18.42%
Employees 43,670
WPK - Winpak - A Canadian packaging manufacturer. One year return was just over 49%. Dividend yield is inconsequential.
Key stats and ratios
Q1 (Mar '15) 2014
Net profit margin 11.39% 10.12%
Operating margin 16.88% 14.63%
EBITD margin - 19.14%
Return on average assets 12.28% 11.01%
Return on average equity 15.16% 13.50%
Employees 2,157
For this portfolio, I have purchased 50 shares of each company. Below is the initial cost to buy shares in each of the companies. The total initial value of the May 2015 portfolio is $15,274.
While there is no guarantee that these stocks will repeat their performance in 2015, it is worth noting that the combined performance of the stocks in the may2015 portfolio in 2014 was 31%, which is even better than the 25% return of the may2014 portfolio. Hopefully these stocks will continue their performance into the next year.
My next update will be at the end of June. At that time we will look at the performance of the new may2015 portfolio and also check in on the may2014 portfolio as well.
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