The World's Greatest Retirement Portfolio
Investing for retirement isn't a sprint; it's a marathon. Though following the daily fluctuations in the stock market makes for good theater, that alone will never lead you to a comfortable retirement.
This summer I set out to find 10 companies that would be the cornerstone for my retirement portfolio. Then, I put my money where my mouth is -- putting at least $4,000 of my own cash into each stock, making CAPScalls on my All-Star profile, and vowing to contribute to charity should I sell any of my positions before three years pass.
Here's a quick review of how the portfolio is doing. Below, I'll highlight five of these stocks that I think represent the best buys for your money right now. And at the end, I'll offer you access to a special free report that'll reveal some shocking truths you need to know to help solidify your retirement.
vs. S&P 500's Return (% Points)
|Google (NAS: GOOG)||June 26, 2011||20.1%||16.3|
|PriceSmart (NAS: PSMT)||June 28, 2011||32.6%||30.2|
|Activision Blizzard||July 15, 2011||3.6%||2.8|
|Intuitive Surgical (NAS: ISRG)||July 25, 2011||14.6%||15.3|
|National Oilwell Varco||July 28, 2011||(8.6%)||(10.6)|
|Coca-Cola||June 21, 2011||3.3%||0.7|
|Whole Foods||July 5, 2011||16.3%||17|
|Amazon (NAS: AMZN)||July 12, 2011||(7.9%)||(8.9)|
|Apple (NAS: AAPL)||June 30, 2011||15%||11.9|
|Johnson & Johnson||Aug. 1, 2011||4.2%||1.1|
Source: Fool.com. Includes dividend reinvestment. Results as of market close on Jan. 31.
I've got to say that I'm pretty happy with these returns. A full 80% of my picks are beating the market, and the portfolio as a whole is whipping the S&P 500 by over 7 percentage points.
Below, I'm going to highlight which five of these companies I think make great buys right now.
Building out for the future
Three of the companies in my portfolio came out with earnings releases that failed to impress Wall Street. Amazon's miss on revenue and its admission that it might post an operating loss of $200 million in the first quarter of 2012 drew a quick rebuke. But I think investors are being far, far too shortsighted here.
The two numbers that stood out the most to me from the earnings release were 35% and 67%. The first is the amount sales increased versus a year ago. That's incredible when you think of how ubiquitous Amazon already is. The second is the percentage increase in the number of employees working for Amazon. Again, this number is enormous. Most of those employees are working in operations and customer service. While some people might be scared by such an increase, I think that kind of attention to customer satisfaction shows just how big a market opportunity Amazon believes it could still capture.
My second big choice for the future is Google. Analysts were obsessed with the company's shrinking cost-per-click metric after earnings were announced. While that metric is important, the sheer volume of ads going through Google's servers -- up 34% -- more than made up for the difference. In the long run, Google's focused ventures under Larry Page -- search, Chrome, Android, and YouTube -- will be keeping the company ahead of the pack for years to come.
Finally, my best-performing stock of the bunch -- PriceSmart -- was getting no love after it announced earnings in early January. But have no fear; like Google and Amazon, I think shortsighted investors -- who are missing the bigger picture -- are weighing shares down. The two big reasons for the miss were lowering of prices in stores (which will help drive a larger volume of traffic in the long run) and the costs of setting up shop in Colombia -- which will give the company exposure to the growing economies of South America.
Two stocks making all the right moves
I really don't have much to write about Apple that hasn't already been said. If it were trading today for the same P/E that it was trading for just before earnings, Apple shares would worth $543 today, a 17% premium to where they are right now. Clearly, I think they're a buy.
Finally, Intuitive Surgical continues to innovate without facing any serious competition. Wall Street seems to be underestimating the potential here; Foolish investors know better. Intuitive is selling more and more da Vinci surgical robots than ever before, and the company has blasted expectations out of the water for 11 quarters in a row now. The stock may seem expensive, but I think in two years, you'll be happy to have grabbed shares now.
Start saving now
If you haven't started socking away money for retirement, it's never too late to start. I hope that by making my savings process very public, I will encourage others to take the necessary steps to secure their future. Along those lines, we here at the Fool have prepared a special free report just for such savers: "The Shocking Can't-Miss Truth About Your Retirement." Inside, you'll get the details on some common mistakes people make on the road to retirement, and how to save thousands of dollars by fixing them. Get your copy of the report today, absolutely free!
At the time this article was published Fool contributor Brian Stoffel owns shares of all of the companies mentioned. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Activision Blizzard, Apple, Johnson & Johnson, National Oilwell Varco, Google, Whole Foods, Coca-Cola, and Amazon.com, and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco, Intuitive Surgical, Amazon.com, Apple, Whole Foods, PriceSmart, Coca-Cola, Activision Blizzard, Johnson & Johnson, and Google; as well as creating a diagonal call position in Johnson & Johnson, a synthetic long position in Activision Blizzard, and a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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