The first month of the year is coming near to an end. With a wild ending to 2018 in the stock market, 2019 kicked off with equally volatile markets but overall moving more positively, indicating a strong start to the year for all major US-indices. However, January was in extreme economic turmoil, with the US-Government shutdown lasting over a month (over for now, at least, after last week’s announcement), and US-China trade war tensions have carried on from 2018.
Either way, you know what they say: the best time to invest is NOW. Regardless of if the market is in recession, depression, or is booming.
For the long-term investor (like me) we don’t worry too much about price; instead, we focus on utilizing dollar-cost averaging, compound interest, and long-time exposure in the market.
So if you are looking to either add more stocks to your own portfolio or watchlist or just curious on what companies that I have on my radar, continue reading to learn what my current stock portfolio consists of.
Right now, I have 7 stocks in my portfolio at the end of January 2019. In no particular order, here are the companies:
- Toll Brothers ($TOL)
- Stitch Fix ($SFIX)
- Amazon ($AMZN)
- iQiyi ($IQ)
- Softbank ($SFTBY)
- Okta ($OKTA)
- Canopy Growth ($CGC)
I’ll give a quick brief description of why I invested in each of these companies.
Toll Brothers ($TOL)
“Toll Brothers is a home construction company based in Horsham, Pennsylvania that specializes in building luxury homes. In 2016, the company was the 10th largest homebuilder in the United States, based on the number of homes closed. The company is ranked 480th on the Fortune 500. The company operates in 20 states.”
I first heard about Toll Brothers when the CFO and two employees came to my Intro to Business class to give a quick talk about their company.
I’ve had them on my watchlist ever since. In 2018, Toll Brothers didn’t have too hot of a year, down by over 40% at one point, hitting lows of $28 per share during the sell-offs in the Fall quarter. That’s when I decided to pull the trigger. In fact, I had my buy-in set at $30/share, slowly watching the stock finally hit my buy-in. I did a simple future cash flow calculation by using EPS and dividend yield, an expected growth rate of 6.66%, giving me future 2023 share value of $60/share, then calculating the present value with a 15% discount to give me $30/share. So far, Toll Brothers has been a great value play stock for me, as it now trades at about $35/share and I just received my dividend payment yesterday. Toll Brothers also has great fundamentals: P/E of 7.16, 1.22% dividend yield, and beating earnings estimate in the last 4 quarters.
Stitch Fix ($SFIX)
Stitch Fix is one of my favorite stocks on this list because of how innovative they are in terms of disrupting the retail clothing industry with e-commerce. You’ve probably seen clothing subscription services popping up more recently, which was a trend started by Stitch Fix. Essentially, Stitch Fix sends you periodic packages of tailored clothing to your doorstep. You try them on, keep and pay for what you like, and send what you don’t like back to the company (they include a Free Return envelope). Buy the entire package and receive a reasonably good discount. Currently, Stitch Fix is heavily marketed to women, but they do have a male option as well as kids option
One of the key aspects of Stitch Fix’s success is their utilization of big data and data analytics–they need to make sure that their tailored outfits are actually liked by their consumers to keep them satisfied to continue paying for subscriptions. What’s great is that with time, much like Netflix, the more paying customers, the more data Stitch Fix receives, and the better they will become (hopefully) at catering to consumer preferences. The idea is that everytime you send a package with clothes back, that the stylists at Stitch Fix will be able to analyze your decisions and make each subsequent package of clothing more fitting to your fashion tastes. Oh, and also I wanted to mention that Stitch Fix has a complete powerhouse CEO Katrina Lake, who is incredibly passionate and charismatic. I have big hopes for her to push this company forward. There have also been rumors that maybe a big company like Amazon might acquire Stitch Fix, as Amazon’s own clothing subscription service is a bit lackluster (of course Amazon likes to dip their toes into everything tech-related, even if they don’t do it well.)
Stitch Fix is valued at over $2 billion and is definitely a big growth story. Their last earnings report caused a huge share price drop to around $18/share, a big drop from their highs of over $50/share during the huge momentum stocks gained in 2018. My average buy-in price was around $20, right after the price crash because I believe this company has huge potential in their marketing strategy, data analytics, and branding.
Do I even need to explain why Amazon is on this list?
Amazon is a pioneer in the e-commerce industry, in frictionless commerce, and in mass acquiring smaller companies. It’s a tech giant set to dominate every aspect of the business world. It’s now considered a “safety” stock. It’s the most valuable company but it’s also a “growth” stock.
I wrote about Amazon as one of my first DTF blog posts last year. Check it out below
Read more: Why I am All-In on Amazon.
iQiyi is also another company I previously wrote about.
iQiyi is often branded as the “Netflix of China” and rightly so: they have over 500 million monthly active users and over 6 billion hours streamed per month. In fact, in 2017, prior to iQiyi’s March 2018 IPO, iQiyi had already made a licensing deal with Netflix to bring Netflix content to the Chinese market.
iQiyi has a paid subscription option for their content, but they also have a lot of free content. In a way, iQiyi is like a hybrid of YouTube and Netflix.
Read more about iQiyi here: iQiyi: The Netflix of China
Softbank is a holding company that has an emphasis on tech companies. The CEO is Masayoshi Son, who, not only is an incredibly intelligent investor and has a knack for seeing potential in startups, is also credited for losing the most money in history during the 2000 internet bubble. Masayoshi Son is known for investing in Jack Ma’s Alibaba before Jack Ma even had a real company. Son is credited by saying he could “see the fire” in Ma’s eyes. If you watch interviews of Son, you can tell he is an incredible leader and visionary, but also quite humble.
I love what Softbank is doing as a company. They have a great CEO, great company culture, very strong cash flow from their many investments, and low debt. They are grossly underpriced right now and has a P/E hovering around 5.2. My average buy-in price was at $34, but I still think this can be a good value stock to have in your company that has a strong portfolio of international tech stocks.
Some of Softbank’s holdings include: Sprint (ca.85%), Alibaba (29.5%), Yahoo Japan (48.17%), Brightstar (87.1%), Uber (15%), Didi Chuxing (ca.20%), Ola (ca.30%), Grab, Renren (42.9%), InMobi (45%), Hike (25.8%), Snapdeal (ca.30%), Brain, Fanatics (ca.22%), Guardant Health, Improbable Worlds (ca.50%), Mapbox, Nauto, Nvidia (ca.5%), One97 Communications (ca.20%), Oravel Stays (42%), OSIsoft, PingAn Heath Cloud (7.41%)
When did internet and data privacy become such a big deal?
Well, it is. In this informational digital age, data privacy is increasingly an important factor in many people’s lives. We want to control our own data.
In a nutshell:
“It provides cloud software that helps companies manage their employees’ passwords, by providing a “single sign-on” experience”
Okta is a company looking to profit on this movement of verification and data protection with their own technology. In all honestly, Okta’s fundamentals don’t look too great. This company for me is a big growth play, and so far, it’s been doing pretty well.
Canopy Growth ($CGC)
Weed weed weed. It’s all anyone could talk about last year when Canada finally legalized it on October 17th, 2018.
Canopy Growth is one of the largest growers of cannabis in Canada, and to me, is positioned well in the market to be one of the forefront companies of the cannabis movement. As of September 2018, Canopy Growth was the largest cannabis company in the world.
You may have also heard of Constellation Brands (the makers of Corona Beer) piling $5 billions of dollars to take a 38% stake in Canopy Growth, up from 10% last November 2018. No doubt these two companies are looking to profit by blending weed with beer, an unlikely pair but potentially revolutionary. Maybe?
Again, this company is NOT fundamentally strong. Canopy Growth is swimming in debt and is making several acquisitions of smaller cannabis companies in Canada and in the US, and is also trying to expand their growing farms. For me, Canopy Growth is a long-term play for me to have a foot in the weed industry which I believe is both very young and has great future potential. Canopy Growth is a growth stock for me, in both a literal and figurative sense.
I wrote a more extensive post about the marijuana industries and other Canadian cannabis companies (including Aurora and Canopy Growth) last summer of 2018 in this post: High Growth Potential