27.9%
GROWTH PORTFOLIO CONTINUES RISE
By Gordon Pape, Editor and Publisher
We created the IWB Growth Portfolio in August 2012 with an initial value of $10,000. After eight and a half years, we’re showing an average annual compound rate of return of almost 28%.
That’s far better than we ever imagined when the portfolio was created (we were looking for about 12%). But always remember, this is a high-risk approach to investing. It is 100% exposed to the stock market, with a focus on momentum plays. So, it should only be used by readers with higher risk tolerance.
Here are the stocks that make up the current portfolio, with an update on how they have performed since our last review in late August. Prices are as of the afternoon of Feb. 17.
Waste Connections (NYSE: WCN). The stock traded as high as US$111.04 in November but has since retreated. Because of timing we received just one dividend, of US$0.205 per share.
Alimentation Couche-Tard (TSX: ATD.B, OTC: ANCUF). This stock has been a big winner for us, but it slipped badly in the latest six-month period, losing $5.64 per share. The shares went into a dive after the French government derailed a $20 billion bid by Couche-Tard to take over grocery giant Carrefour. At present, there is no other likely takeover target in sight, and this is a company that grows by acquisition.
WSP Global Inc. (TSX: WSP, OTC: WSPOF). This international engineering and technology firm is one of the companies that could benefit from a U.S. infrastructure stimulus plan. The stock is up $27.90 since the last review. It hit an all-time high in January. We received two dividends totaling $0.75 per share.
Shopify (TSX, NYSE: SHOP). Ottawa-based Shopify continues its amazing run, with the stock up $408.28 since the last review. The company has been one of the major beneficiaries of the growing trend to online shopping that has been fueled by the pandemic. The gain since we added the company to this portfolio is now 2,253%.
Pfizer (NYSE: PFE). We added this pharmaceutical giant to the portfolio a year ago, based on its strong position in the race for a coronavirus vaccine. The premise turned out to be correct, in the sense that Pfizer and its German partner BioNTech were the first to have their vaccine approved in North America. But the billions of dollars in orders the companies have received have done nothing to boost Pfizer’s share price, presumably because the vaccine is being made available at cost or close to it. The shares are down $3.11 since the last review.
Amazon.com (NDQ: AMZN). Amazon paused in its upward march as the shares pulled back by $125.51 in the latest six-month period. I suspect the retreat is only temporary, however. Market dynamics are working in the company’s favour.
Apple Inc. (NDQ: AAPL). Apple shares split 4 for 1 shortly after our last review. That means we now own 80 shares of this high-tech giant. The stock has not shown much movement recently as the market consolidates but Apple still remains a long-term growth opportunity. We received two dividends of US$0.205 each.
Costco (NDQ: COST). We added Costco to the portfolio at the time of our last review in August. The shares are up more than US$13 since, plus we received a special dividend of US$10 per share in December.
United Parcel Service (NYSE: UPS). This is the world’s largest package delivery company and is on the leading edge of new delivery technologies, especially in the healthcare sector. We added it to the portfolio in September 2019 at US$118.85 The stock did well over the summer but has stalled since the last review, with a gain of just US$2.20. We received one quarterly dividend of US$1.01.
Cash. We received interest of $16.18 on our cash holdings at Motive Financial.
Here is how the portfolio stood as of the afternoon of Feb. 17. Commissions are not considered. The U.S. and Canadian dollars are treated as being at par but obviously gains (or losses) on the American securities are increased due to the exchange rate differential.
IWB Growth Portfolio (a/o Feb. 17/21)
| Symbol | Weight
% |
Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Dividends
Retained |
Gain/
Loss % |
| WCN-N | 5.6 | 45 | $84.48 | $3,801.60 | $98.06 | $4,412.70 | $56.92 | +17.6 |
| ATD.B | 7.0 | 140 | $8.32 | $1,164.10 | $38.98 | $5,457.20 | $178.03 | +384.1 |
| WSP | 13.4 | 90 | $27.00 | $2,430.29 | $116.26 | $10,463.40 | $129.11 | +335.9 |
| SHOP-T | 23.6 | 10 | $78.71 | $787.10 | $1,849.09 | $18,490.90 | 0 | +2,253.1 |
| PFE | 8.0 | 180 | $35.38 | $6,368.40 | $34.94 | $6,289.20 | $271.80 | + 3.0 |
| AMZN | 8.5 | 2 | $2,042,76 | $4,085.52 | $3,316.34 | $6,632.68 | 0 | +62.3 |
| AAPL | 13.3 | 80 | $30.43 | $2,434.07 | $130.38 | $10,430.40 | $302.44 | +340.9 |
| COST | 9.1 | 20 | $344.27 | $6,885.40 | $357.40 | $7,148.00 | $228.00 | + 7.1 |
| UPS | 10.2 | 50 | $118.45 | $5,922.50 | $161.10 | $8,055.00 | $250.00 | +40.2 |
| Cash | 1.3 | $977.66 | $993.84 | |||||
| Total | 100.0 | $34,856.64 | $78,373.32 | $1,416.30 | +117.4 | |||
| Inception | $10,000.00 | +697.9 |
Comments: After a huge gain last summer/fall, the portfolio returned to a more normal performance, adding 8.1% in the latest review period. We had disappointing results from Waste Connections, Pfizer, and Alimentation Couche-Tard but those were more than offset by huge contributions from Shopify and WSP Global.
The total gain over eight and a half years stands at 697.9%. That’s an average annual compound growth rate of 27.68%. That’s well ahead of our target.
Changes: We will sell our position in Pfizer. If the stock didn’t get a boost from its impressive vaccine roll-out, nothing is ever going to budge it. With retained dividends, we have $6,561 to invest.
We will also sell Waste Connections. It’s a sound company but not really a high-growth story anymore. That adds another $4,469.62, for a total of $11,030.62 to reinvest.
We will put that money into the shares of a disruptive technology ETF, which has been doing very well. It’s the ARK Innovation ETF (NYSE: ARKK), managed by Catherine Wood who has become one of the brightest new stars on Wall Street. The fund invests in companies that are involved in the development of new products or services, technological improvements, and advancements in scientific research. Special focus is placed on DNA technologies, industrial innovation in energy, automation and manufacturing, the next generation of internet technologies, and systems that make financial services more efficient. Top holdings in the portfolio include names like Tesla, Roku, Square Inc., Teledoc Health, and Zillow Group. This is high-risk/high-reward territory but that’s what the Growth Portfolio is all about.
This ETF has a very impressive record. It gained 152.5% in 2020 and shows an average annual rate of return of 36.4% since its inception on Oct. 31, 2014.
The units were trading on Feb. 17 at US$151.93. We will buy 75 units for a total cost of US$11,394.75. We will take $364.13 from cash to make up the difference.
The rest of the portfolio remains the same.
After the ARKK purchase, our total cash is $1,717.29. We will keep the money at Motive Financial, which now pays 1.55% on its Savvy Savings Account.
Here is the revised portfolio. I will review it again in August.
IWB Growth Portfolio (revised Feb. 17/21)
| Symbol | Weight
% |
Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Dividends
Retained |
| ARKK | 14.5 | 75 | $151.93 | $11,394.75 | $151.93 | $11,394.75 | $0 |
| ATD.B | 6.9 | 140 | $8.32 | $1,164.10 | $38.98 | $5,457.20 | $178.03 |
| WSP | 13.3 | 90 | $27.00 | $2,430.29 | $116.26 | $10,463.40 | $129.11 |
| SHOP-T | 23.5 | 10 | $78.71 | $787.10 | $1,849.09 | $18,490.90 | 0 |
| AMZN | 8.4 | 2 | $2,042,76 | $4,085.52 | $3,316.34 | $6,632.68 | 0 |
| AAPL | 13.3 | 80 | $30.43 | $2,434.07 | $130.38 | $10,430.40 | $302.44 |
| COST | 9.1 | 20 | $344.27 | $6,885.40 | $357.40 | $7,148.00 | $228.00 |
| UPS | 10.2 | 50 | $118.45 | $5,922.50 | $161.10 | $8,055.00 | $250.00 |
| Cash | 0.8 | $629.71 | $629.71 | ||||
| Total | 100.0 | $35,733.44 | $78,702.04 | $1,087.58 | |||
| Inception | $10,000.00 |
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