A version of this article appeared on our website March 31, 2015.
<Our best ideas at any time are included in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.>
The “20 Something’s Stock Portfolio” is the first in a series of articles where we get to the core of what many brand new investors want to do when they are first introduced to the stock market: find exciting companies that they are familiar with that will help compound their wealth over time.
Other portfolios that we will share in this series include “The Ultra High Income Portfolio,” “The Economic Castle Portfolio,” “The Dividend Cushion Portfolio,” and “The Intelligent ETF Investor’s Portfolio,” among others. The series of portfolios will serve as a supplement to Valuentum’s existing Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.
The “20 Something’s Stock Portfolio” is not a model portfolio, meaning it’s not for everyone, even if they are in their 20s. We are not your personal financial advisor, so we can never provide personalized financial advice to you. The reason is that we can’t possibly know your risk tolerances and investment goals, nor do we know what is right for you in your particular circumstances at this particular time. Only a financial advisor can tell you this.
That said, the “20 Something’s Stock Portfolio” is a portfolio of stock ideas that hosts some of the most exciting (and fun) companies with some of the best earnings growth prospects over the long haul. These aren’t stable entities by a long shot, but firms levered to long-term secular growth patterns. The “20 Something’s” want investing to be fun!
Due to their fantastic equity price appreciation potential, the stocks on this list also have a lot of risk (a lot), and stock price moves around their quarterly earnings reports can be 10%, 20% or more at times. So you should be aware of such volatility. Capital can also become permanently impaired in the event any one of these firms declares bankruptcy as the business models of a few below have yet to be proven.
Many (or better yet, most) of the stocks below simply aren’t for us, but we want to keep the exciting ones on your radar, if you’re not aware of them.
3D Systems (DDD)
3D Systems is at the forefront of exciting 3D printing technology, and we expect the firm to eventually be acquired as operators consolidate. Could IBM be a suitor as it looks to sort out its own growth prospects?
Alibaba (BABA)
Alibaba is synonymous with e-commerce growth in China, which will be robust for some time. We think Alibaba is one of the best ways to play long-term economic expansion in the country.
Apple (AAPL)
Who doesn’t know Apple? This company has more cash than a few of the market capitalizations of some of the largest companies in the S&P 500 combined. Wearable technology and Apple TV. What’s next?
Biogen (BIIB)
Biogen has been off to the races in recent years, but it has a hidden gem in Phase III development for Alzheimer’s disease. If things work out for the drug, the payoff could be huge.
Boston Beer (SAM)
For the craft brew drinker, the company that started the revolution. Will craft brews continue to proliferate? Boston Beer will have its hand in the growth.
Buffalo Wild Wings (BWLD)
Beer, wings, and sports? Need we say more? This company’s unit store growth will be phenomenal in coming years, and management continues to discover new ways to manage input costs. B-Dubs also has a hidden fast-casual pizza concept in its portfolio.
Capella Education (CPLA)
It’s hard to find an educator with better economic returns than Capella. This online based provider does more with one dollar of invested capital than most any other firm in our coverage universe.
Chipotle (CMG)
The fast casual burrito maker has revolutionized the segment. The pace of same-store-sales expansion and unit growth will continue to be phenomenal for the foreseeable future. What about breakfast? The Chipotle story is far from over.
Churchill Downs (CHDN)
How fun is this idea? For those that aren’t going to Omaha in the first week of May, the first Saturday in May is home to “the most exciting two minutes in sports,” the Kentucky Derby. Churchill Downs’ growth-by-diversification strategy is paying dividends. It’s no longer beholden to trends in thoroughbred racing. A name change may be warranted?
Continental Resources (CLR)
With oil prices cut in half, the bottom-catchers are out. Continental’s position in the Bakken makes it an attractive take-out candidate. Continental means production growth in the energy sector.
Core Labs (CLB)
Talk about a firm with fantastic economic returns. The company is simply in a class by itself. For investors wanting to partner with an energy company laser-focused on return on capital, this is one of them.
Corning (GLW)
Gorilla glass? Saphire crystal displays? Whatever the future may bring with respect to cell phone display technology, Corning will likely have its hands on it.
Costco (COST)
One of the best companies as it relates to a multi-stakeholder model. Who can overlook how much it pays its workers? A bet on the idea that highly-paid workers make a good company.
Facebook (FB)
Who doesn’t know about Facebook? The company may own the Internet in 10, 20, or 30 years. What else might CEO Mark Zuckerberg have up his sleeve? Only time will tell.
First Solar (FSLR)
A highly-profitable play on the solar industry. The company also has a boatload of net cash on the balance sheet. Will it become acquisitive and rationalize the industry?
Gilead Sciences (GILD)
The company cures hepatitis C. What a breakthrough! Now paying a dividend and buying back stock, will its pipeline have other blockbusters?
Groupon (GRPN)
The company speaks of entrepreneurialism from its base in Chicago. Three cheers! The company is getting things in order as of late. Being free cash flow positive and having a boatload of cash on the balance sheet helps.
EOG Resources (EOG)
EOG Resources is the largest crude oil producer in the South Texas Eagle Ford Shale and North Dakota Bakken. The company won’t remain independent for long. A suitor is looming.
Hasbro (HAS)
The licensing company has found new life. What else does it have up its sleeve? The Frozen franchise will be a boon for profits.
Intuitive Surgical (ISRG)
If you think robotic technology in surgery is the way of the future, Intuitive Surgical is worth a look. Boasting a nice razor/razor-blade model, there’s a lot to like.
Michael Kors (KORS)
The aspirational brand is growing like a weed. The company’s shares look cheap. Is the market getting the story completely wrong?
Qualcomm (QCOM)
Hugely-profitable licensing company with a cash hoard on the balance sheet. One of the strongest business models in all of technology.
Pandora (P)
The leader in Internet radio is not getting the respect that it deserves in the marketplace. What gives?
PPG Industries (PPG)
The company has a wonderful dividend growth track record, and we like its pricing power. This coatings firm is one of our favorites in the chemicals space.
Salesforce.com (CRM)
Deferred revenue growth is the key metric for this company. What a great sales team at the helm. Certainly one to keep a close eye on.
Synaptics (SYNA)
Think that human interface technology is the way of the future? Well then, Synaptics is a company worth a look. Believe it or not, the firm was the inventor of the click-wheel on Apple’s first-generation iPod that started it all. Can you imagine what else might be in store decades from now?
Tesla (TSLA)
What a testament to capitalism! A brand new car company. Will it survive? Only time will tell.
Twitter (TWTR)
The latest in social media. Not yet sustainably profitable, but the company has a long time before it has to prove itself to shareholders. The technicals are driving this one.
Under Armour (UA)
Nike’s younger brother. Under Armour is a huge entrepreneurial success story, and the firm has handled adversity well. Who can forget, “Protect This House.”
USG (USG)
Mr. Buffett owns 30% of this wallboard maker. The firm arguably has the greatest operating leverage in our coverage. Watch earnings explode as revenue moves higher.
VCA Antech (WOOF)
Pet lover? VCA Antech is the leading provider of pet health care services in the US. Did you know that more than $30 billion is spent in the US on pets each year for veterinary care, supplies, medicine, boarding and grooming?
Visa (V)
Plastic anyone? One of the best business models out there with the highest operating margins. Does not take on credit risk like American Express and Discover.
Zoe’s Kitchen (ZOES)
For the recent IPO in you. This fast-casual Mediterranean restaurant could be the best growth story in small cap today. It targets educated, affluent women and their families.
Think we missed an idea for the ’20 Somethings’? Let us know.