It's Good-bye, Coke and Hello, Starbucks for This Market-Beating Retirement Portfolio
More than two years ago, I decided that the best way I could help the world invest better would be to make my investment decisions as transparent as possible. I pledged to invest $40,000 of my own retirement money in 10 stocks, and to attempt to hold them for at least three years.
As you can see, the portfolio has performed remarkably well. Investing alongside the recommendations, the $40,000 has grown to $64,680. This is $8,080 more than if it had just been invested in the S&P 500 -- or an outperformance of more than 20 percentage points.
Vs. S&P 500 (percentage points)
National Oilwell Varco
Johnson & Johnson
As you can see, Coca-Cola is one of only three investments losing to the market. But that's not why, this past May, I announced that I would be selling my shares before that three-year threshold was reached.
Instead, I was motivated by variables that have nothing to do with Coke's stock, and everything to do with the core products the company relies on for revenue. With our first child on the way, my wife and I decided that Coke products would be off-limits. After giving it some thought, we were also personally uncomfortable profiting from a company that plays a role in our national obesity and diabetes epidemics.
There's nothing wrong with owning Coca-Cola stock, per se, but if owning any stock keeps you up at night, it's time to sell -- and that's what we determined to do.
So what's taken so long for us to take action? The main culprit was the birth of our daughter, combined with an interstate move that left little time for due diligence on possible stock replacements.
But that time has come, and as of last week, Coke has officially been replaced by Starbucks in this real-life portfolio.
Behind my thinking
Make no doubt about it: This is an ill-timed trade. Since May, Coke's stock is down 7%, while Starbucks' is up almost 30%. Additionally, though both stocks appear pricey, Coke looks cheaper than Starbucks based on most traditional metrics.
But while reviewing my most-successful stocks, I noticed that they all share three core traits: a mission beyond profit, a focus on the long-term, and a founder at the helm. Starbucks fulfills all three traits, with founder Howard Schultz saying from the very beginning that he wants Starbucks to be a "third place" where community can gather -- with home and work being the first two.
The company is just getting started on what could be a very long growth runway in emerging Asian economies. Starbucks' purchase of Teavana -- and the opening of its first branded store in Manhattan -- represents another monster market that the company is going after. And some think the recent additions to Starbucks' food offerings are even putting a dent in sales at fast-casual diners.
I may be overpaying right now, but I plan on holding shares for as long as these three key variables remain in place at Starbucks. I think that many years from now, today's price will seem like a steal.
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The article It's Good-bye, Coke and Hello, Starbucks for This Market-Beating Retirement Portfolio originally appeared on Fool.com.Fool contributor Brian Stoffel owns shares of Apple, Google, Johnson & Johnson, Amazon.com, Starbucks, Baidu, National Oilwell Varco, Whole Foods Market, Intuitive Surgical, and PriceSmart. The Motley Fool recommends Amazon.com, Apple, Baidu, Coca-Cola, Google, Intuitive Surgical, Johnson & Johnson, National Oilwell Varco, PriceSmart, Starbucks, and Whole Foods Market. The Motley Fool owns shares of Amazon.com, Apple, Baidu, Coca-Cola, Google, Intuitive Surgical, Johnson & Johnson, National Oilwell Varco, Starbucks, and Whole Foods Market. 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.