Though it might have seemed like a roller coaster, the first half of 2012 was actually a pretty good one for investors. The S&P 500 was up 9.1% including dividends between January and July 1. I'll take returns like that any day.
And yet, if you had used my hypothetical "World's Greatest Growth Portfolio" as a guide, you would be up 21.9%. It's only been six months, so I'm not declaring victory anytime soon, but the results speak for themselves.
Below, I'll tell you what to keep your eye on in July, identify three stocks that I think are buys right now, and offer access to a report on how to profit from a groundbreaking new technology.
Jan. 1 balance
lululemon athletica (NAS: LULU)
Apple (NAS: AAPL)
Westport Innovations (NAS: WPRT)
IPG Photonics (NAS: IPGP)
Baidu (NAS: BIDU)
Source: Fool.com. A $1,000 starting balance used to easily illustrate returns.
The biggest winner of the past month has definitely been Westport Innovations. A slew of partnership and joint venture announcements have helped buoy the designer of natural gas engines. During the month of June alone, the stock rose 50%.
With the end of the second quarter last week, July will be a month with lots of earnings news to keep your eye on. Before getting to my best buys now, I've listed below the companies reporting in July, and how they're expected to do.
Sources: Thompson Reuters, E*TRADE.
Three best buys
First on my list of best buys for the month is a company I just vowed to put my real money behind: Baidu. Because you can read a more in-depth analysis by clicking the link above, I'll keep it short and sweet. China's leading search engine is dirt cheap compared with its growth prospects, and has a solid catalyst -- the adoption of the Internet in China -- moving it forward. Though there are worries about slowed growth in China, Baidu is a solid buy.
Second on my list is a company that's drawn the ire of the rumor mill: lululemon athletica. The leading yoga retailer has nothing wrong with its underlying business; revenue was up 53% last quarter, earnings per share were up 39%, and sales in comparable stores were up a mind-boggling 24%.
Instead, a combination of higher material costs and whispers that hedge fund manager David Einhorn might be shorting the stock have combined to cut the share price by 18% during June. Though some may think the stock is priced too high right now, I believe Lululemon represents a best-in-class business that still has a long runway for growth.
Finally, shares of IPG Photonics continue to trade at bargain prices. The company is the market leader in a truly disruptive innovation: fiber-optic lasers. These lasers are still in the early adoption phase across several markets, and are more powerful, reliable, and cost-efficient than their carbon-based brethren.
Shares are being held down by twin worries over Europe, from which the company derives a significant portion of its revenues, and a global economic slowdown. Because its lasers are primarily used in cutting and welding heavy machinery, it is acutely sensitive to economic cycles. Though there might be better times to buy in the future, the long-term investor can rest easy knowing that today's prices are a great deal.
One look at my portfolio will tell you that I like investing with disruptive innovators like IPG Photonics. There's another disruptive innovation that'll be on investors' radars soon: 3-D printing.
If you'd like to know where to invest before everyone's talking about it, I suggest checking out our special free report: "3 Stocks to Own for the New Industrial Revolution." I'll give you a clue and tell you that I hold one of the three companies in this portfolio. To find out which one it is, and what the other two are, get your copy of the report today, absolutely free!
At the time thisarticle was published Fool contributor Brian Stoffel owns shares of all the companies mentioned. You can follow him on Twitter, where he goes by TMFStoffel.The Motley Fool owns shares of Zipcar, MAKO Surgical, Apple, Google, Whole Foods, Baidu, Amazon.com, Westport Innovations, Intuitive Surgical, IPG Photonics, Solazyme, and lululemon athletica. Motley Fool newsletter services have recommended buying shares of Whole Foods, Amazon.com, Westport Innovations, Intuitive Surgical, Stratasys, MAKO Surgical, Baidu, Apple, Google, IPG Photonics, lululemon athletica, and Zipcar; and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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