Recently, I was approached by the folks from Kapitall’s user experience design team and asked to create a model portfolio to share with new users. So I built a practice portfolio using $1mm of virtual money –one of the perks of reaching Platinum status on Kapitall means getting to make stupidly big practice portfolios. (Don't worry, you'll get there too – just keep on using the Kapitall research tools to boost your Mastery Points.)
For my stock selections, I went with the list of value candidates I sent you back in December of 2012. Click here if you want to refresh your memory.
As I built out my long-term value portfolio I realized that it’s become more difficult to locate the super cheap stocks that were around in the Fall—nothing like a government debt and banking crisis to create massive opportunity. What I've tried to do in this case is fill the model portfolio with a combination of core companies every portfolio should contain a bit of, like Procter and Gamble (PG), Berkshire Hathaway (BRK/B), and Apple (AAPL), and a major oil; in this case, I chose Conoco Phillips (COP) because of its good dividend and plethora of U.S. oil and gas reserves. I then added a mix of solid but cheap companies with P/E ratios in the single digits. I like to look what the amount you pay for a each dollar of twelve-month projected earnings. At Kapitall will call that ratio the Price Of Profit (POP). You can find it on the cover of every stock object.
Right now, “solid” and “cheap” are easier to find outside the U.S. than inside. Look at the German company Siemens (SI), with a POP of 8 vs. its American rival GE with a POP of 13. Other single digit POP non-US value companies are drug makers Teva (TEVA) (POP 8, Israel), Astrazeneca (AZN) (POP 7, UK), and the Brazilian mining behemoth, CVRD (VALE) POP 6.
If you want to see what I mean, check out the portfolio below. Drag it on to your Kapitall playground to follow it going forward. And as always, I answer all comments sent via Kapitall.
I own every stock shown in the portfolio but Skyworks. I plan on buying it soon but am not sure it will make a good long term hold.
David Neubert is a cofounder and shareholder of Stereo Scope, Inc., the sole owner of Kapitall Generation, LLC (“KapGen”), an SEC registered broker-dealer and FINRA member. Mr. Neubert is not an associated person of KapGen or any other broker-dealer and, other than his indirect relationship described above, he has no control or affiliation with KapGen.
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