I was on holidays for the last two weeks and while I took a break from the weekly blog, I kept an eye on the markets and even sent three buy alerts over this period. So much has happened within the span of a fortnight, from the worsening of the pandemic in the US, to the diplomatic tension between the US and China and the start of the earnings season. While the first two may offer an excuse for a correction, all eyes are on earnings which will be the reality check for this frothy market.
Two months have passed since the inception of the Responsible Investor Portfolio and we are still in the black with a total return of 1.9% (excluding dividends) whereas the market is up 1.3% (0.6% market beat).
The majority of our 18 portfolio positions are traded in European currencies whereas 43% is in USD. Over the last two weeks the USD has lost 4.4% vs the Euro and this impacts on our portfolio on which I report in USD.
We initiated a position in Tencent the week before last and also one in the Italian contractor WeBuild (previously trading as Salini). Following the approval of the EU Recovery Fund and a positive technical signal, I also sent a buy alert for an ETF which reproduces the price of a selection of European dividend stocks and is traded on the Italian stock market, EUDV.MI.
The table below summarises the portfolio performance since inception.
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In a mixed week for the US stock market, ended on April 24th, we have made four more successful trades:
For some of these companies, under normal market conditions, I would continue to hold, rather than sell to lock in a small profit, however these are no normal conditions ! There is so much complacency right now and the market seem to price in not only the Fed interventions but the possibility that, if things get worse, the buying could extend to securities also.
Having said that I remain only 50% invested in my eToro portfolio so that a sudden market drop would not hurt as much and would give me enough fuel to enter more long positions after it stabilises again.
We have also initiated the following long positions last week:
$SQQQ this is a hedge for the reasons above
$PTON this is to attempt a ride on a popular stock
..plus another one which you are welcome to check out in my eToro portfolio.
The earnings season is in full swing: enjoy and invest responsibly !
Verizon (ticker: $VZ ) has been a great investment for me so far, I have owned it for about 2 years now. It is one of the value stocks which offers both a solid dividend (>4%) and capital appreciation.
It is considered a 5G play and its deal with $DIS related to Disney+ has helped it soar.
Verizon is a mega cap, with a market value of 240B $. It currently trades at 58.13$ and it was trading at about 48$ when I bought it. This means a 20+% capital appreciation which outperformed the SP500 by 15 percentage points over the same period. And then you have to add the dividend, which was about 5% at the start of my investment and is now 4.28%. American stocks typically pay dividends out on a quarterly basis which gives you the option of re-investing more frequently than, say, most European stocks which pay a dividend on a yearly basis.
In terms of valuation, the stock is actually quite pricey at the moment and the projected total return over the next 5 years, including dividend, is of 41%. There are plenty of better valued stocks out there which offer a greater growth potential (even >100%), like $AMZN and $TSLA, but you probably want to combine more aggressive plays with other less volatile investments in order to stabilise your portfolio. In 2008, when the market was down 38.5%, Verizon was “only” down 21%. So far in 2020 Verizon is down 7% compared to a 15% fall of the SP500.
The stock has had a steep recover from the late March lows and is now trading above the 5 and the 50 moving average, with the 200 moving average within grasp.
It reports earnings for Q1 of 2020 on Friday the 24th of April. Consensus estimates are EPS of $1.22 and revenue of $32.37B.
If you want to see all the positions of one of my portfolios, you are welcome to follow me on eToro here.
Accenture ($ACN) provides management consulting, technology, and outsourcing services and is normally among the first companies reporting earnings at the beginning of each quarter: I find their earnings more interesting than those of Alcoa which have traditionally been considered as the start of the earnings period.
The company reported an earnings beat for Q3 on June 28th for both EPS and revenue. Guidance was reported as being in-line with expectations. Earnings misses are rare for $ACN and the company forecasts more top- and bottom-line growth in the quarters ahead.
The company is now up 8% YTD and has beaten the market over the years doubling its value over the last 5 years and tripling its value over the last 10 years. Despite these capital appreciation figures, it also yields a 1.6% dividend to its investors.
Here is a snapshot of their operations as of the first half of 2018:
Accenture is a global leader in the digital transformation and is also seen by some as a #blockchain play.
As the impact of federal stimulus fades, so should U.S. stock prices.
— Read on www.investopedia.com/news/bull-market-seen-ending-2019-after-fiscal-sugar-rush/