This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
The Beginners Portfolio is a virtual portfolio, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.
The recent uptick in the FTSE 100 has helped the Beginners portfolio quite nicely, and were up across the board since my last check since I made the first investment for the portfolio back in May 2012, were up 46%.
Against that, the FTSE 100 is up 32%. Our 46% does include dividends, but also accounts for spreads and dealing costs, and once those are deducted were on a more modest gain of 39%. But Im still pleased with that, and occasionally kick myself for my disastrous mistakes in buying Quindell and for not spotting Blinkxs overvaluation sooner had I stuck 100% with solid blue chips, wed be significantly ahead of todays position now.
Of those blue chips, three stand out as big winners:
Shares in Apple (NASDAQ: AAPL.US) have stormed up 96% since I added them to the portfolio in January 2013, including dividends and after all costs, which is a remarkable performance for a stock that had already had such a great run. At $129 per share now, post-split, are they still good value?
Its only eight years since the iPhone was first introduced, and 50% of the worlds adult population now owns a smartphone and estimates suggest that will rise to 80% by 2020. Apples iPhones are still the desirable thing to have at the top end of the market, and the company is continually developing the services to back up its hardware. Im holding.
Housebuilder Persimmon (LSE: PSN) has been in the portfolio since July 2012, and with the shares at 1,764p were sitting on a total gain of 192%. In the depths of the housing crisis when the whole sector was in the dumps, but the canny builders were building up huge land banks at knockdown prices, it seemed obvious to me that there were great bargains to be had.
Persimmon shares are still on a forward P/E of only 12, dropping to 10.5 for 2016, and is in the middle of a big cash-return programme. Were even looking at PEG ratios of 0.7 for each of the next two years, which is classic growth territory.
And finally, another great example of buying quality shares when theyre being stomped on. Aviva (LSE: AV)(NYSE: AV.US) was crushed when it caved in to inevitability and slashed its final dividend in 2012, and I added some in May 2013. Since then the dividend has come bouncing back, and has helped us to a 73% total gain.
And again I think this is a stock thats still cheap. Theres a doubling in EPS expected for the year just ended (with results due on 5 March), which would leave the 538p shares on a P/E of 11.4 and that would drop to 9.5 on 2016 forecasts, with dividend yields heading back up to 4.7%.
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