3 Buy Now Stocks from the "World's Greatest Growth Portfolio"
In January of 2012, I identified 13 stocks that would compromise an ideal growth portfolio. Since then, investors following along with me have turned $10,000 into $13,230 -- a 32.3% increase, and $780 better than if they had just invested the money in the S&P 500.
Every month, I look over these stocks to see which three are tempting. I call these my "Buy Now" stocks because I think they're pretty good deals. Read the chart below to see how the whole portfolio has performed, check out my best buys, and at the end, I'll offer up access to a special premium report on one of the 13 stocks included.
Core | ||||
|---|---|---|---|---|
Company | Allocation | Jan. 1st balance | Current balance | Change |
11.5% | $115.00 | $97.41 | (15.3%) | |
11.5% | $115.00 | $133.98 | 16.5% | |
11.5% | $115.00 | $113.39 | (1.4%) | |
11.5% | $115.00 | $113.39 | (1.4%) | |
Tier One | ||||
7.5% | $75.25 | $84.88 | 12.8% | |
7.5% | $75.25 | $63.66 | (15.4%) | |
7.5% | $75.25 | $75.55 | 0.4% | |
7.5% | $75.25 | $65.69 | (12.7%) | |
Tier Two | ||||
5% | $50.00 | $54.50 | 9% | |
5% | $50.00 | $86.25 | 72.5% | |
5% | $50.00 | $50.60 | 1.2% | |
5% | $50.00 | $56.65 | 13.3% | |
5% | $50.00 | $49.80 | (0.4%) | |
Year-to-date | $1,000.00 | $1,045.75 | 4.6% | |
Source: YCharts. Comparison to S&P 500 does not include dividends returned, as that is usually not an key aspect of a growth portfolio.
IPG Photonics
IPG is a leading company in the design and manufacture of fiber-optic lasers. These lasers are stronger, more reliable, and cheaper than their carbon-based counterparts. The company released earnings this week that disappointed the street, and sunk the stock. For the first quarter, the company increased revenue by 15%, but because of margin contraction, earnings per share only jumped 10%. But I think now presents a buying opportunity for long-term investors.
The company's main source of revenue is materials processing, which is where the lasers are used to cut and weld large pieces of metal for heavy industrial companies. That business grew 29% year over year, which is a very healthy clip.
One might wonder, then, why revenue growth wasn't also around 29%. That's largely because the company offered lower price points to manufacturers -- but that was not based on pricing pressures, and was, instead, an effort to drive adoption of fiber-optic lasers. This is good for two reasons: first, it lets manufacturers see, first hand, the value of the lasers; and second, it makes it more difficult for competition to compete on price. Long term, I think it's a winning strategy.
Baidu
This stock is a great test of an investor's patience. After showing years of earnings growth north of 30%, things came to a screeching halt during the first quarter. Though revenue increased by 40%, earnings per share were up only 15%.
What gives?
The company, much like Google started having to do a few years back, is investing heavily in its mobile strategy. An ad displayed on a smart phone or tablet brings in less revenue than one pulled up from a desktop computer. Baidu ramped up R&D spending by 83% in an effort to optimize its mobile strategy.
Over time, for Google, that strategy has played out well. I'm banking on the same with Baidu, and the company's stock can be had for just 13 times projected 2013 earnings.
Stratasys
3D Systems was actually the 3-D printing company from this portfolio that made some noise in April. The company came out with earnings that showed revenue increases of 31% -- though that has to be kept in context with the fact that organic growth was 22%. The difference in numbers comes from the fact that 3D Systems is a serial acquirer, something the company continued with immediately following its earnings release.
But it's Stratasys that I'm tapping for this month's buy -- not because 3D's acquisition route is necessarily bad. I'm just far more comfortable with how Stratasys looks for fewer, more strategic acquisitions -- like Objet in 2012.
The company will be coming out with earnings on May 13. I'm expecting continued strong results from the company's Fortus line -- which focuses on actual production using 3-D printers -- while my interest will be piqued by how the new Mojo printer, a more consumer-facing product, sells.
The right 3-D printer for your portfolio
I'm a fan of both 3-D Systems and Stratasys, though its clear from my choice above that Stratasys is my favorite. To get a second opinion, the Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.
The article 3 Buy Now Stocks from the "World's Greatest Growth Portfolio" originally appeared on Fool.com.
Fool contributor Brian Stoffel owns shares of Apple, Google, Amazon.com, LinkedIn, Starbucks, Baidu, Whole Foods Market, Lululemon Athletica, Intuitive Surgical, Westport Innovations, Stratasys, and IPG Photonics. The Motley Fool recommends 3D Systems, Amazon.com, Apple, Baidu, Google, Intuitive Surgical, IPG Photonics, LinkedIn, Lululemon Athletica, Starbucks, Stratasys, Westport Innovations, and Whole Foods Market. The Motley Fool owns shares of 3D Systems, Amazon.com, Apple, Baidu, Google, Intuitive Surgical, IPG Photonics, LinkedIn, Starbucks, Stratasys, Westport Innovations, and Whole Foods Market and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. 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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