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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 past few weeks of market turmoil have knocked the Beginners Portfolio back a bit, and were now only up 24.6% since inception in May 2012 (including all costs and spreads), compared with 34.3% at the end of 2015. But ironically its the safer shares that have been hurt the most, with the higher-risk growth constituents holding up well.
ARM Holdings (LSE: ARM) has actually disappointed a little since it was added in December 2014. After a promising first few months and a nice price rise, its been up and down ever since, and with the price today at 939p were looking at no overall movement at all once costs, spreads and dividends are included the share price itself is up 2.8%.
But theres nothing at all wrong with ARMs fundamental performance, after adjusted EPS for 2015 came in 25% ahead of the previous year (with reported EPS actually up 33%). That came from a 19% increase in revenue in sterling terms, after 4bn ARM-based chips were shipped in the final quarter with microcontrollers and mobile device chips growing strongly.
Analysts are predicting a 43% rise in EPS this year, which would take the P/E down to 27 thats about double the FTSE average, but its the lowest ARM shares have been on for years.
Our investment in Apple (NASDAQ: AAPL) has done better, with a 50% total gain since January 2013, up to $96, thanks in part to the firms move to paying dividends. The price has flattened a bit of late, because of the possibility that sales might actually fall back a little this year.
But thats a very short-term view, and to put it into perspective the company has just posted its biggest quarterly profit ever at $18.4bn after selling 74m iPhones. A vast proportion of the worlds population dont have smartphones, and as wealth increases theyll be buying them and phone junkies will keep upgrading. Looking at that longer-term picture, on a P/E of only around 10.4, Apple shares still look cheap to me.
Plain old bricks
And finally to the portfolios biggest winner so far, Persimmon (LSE: PSN), which I added in July 2012 when the whole housebuilding sector looked insanely undervalued. Persimmon was in a strong financial position and was snapping up building land while it was going cheap, and thats helped it post four years of EPS rises averaging around 50% per year.
The share price has soared to 2,060p today, and after adding in the firms special dividends (and deducting all costs), were on a 243% total gain. Is it time to take some profit? I dont think so.
Theres an EPS rise of 28% expected for the year just ended, with results due on 23 February and a January update told us of a 13% rise in revenue, with 8% more homes completed at a 4.5% higher average selling price. With the shares on a prospective P/E of 13, dropping to under 12 on 2016 forecasts, and dividends set to yield around 5%, Persimmon looks like its turning from a growth share into a strong income share.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool UK has recommended ARM Holdings. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.