Thursday, August 27, 2020

Home Run Number 21

I designate stocks in my portfolio that cross the 100% mark in total returns, home runs.

In June, I celebrated DivGro's 20th home run when the share price of (AMZN) doubled the average cost basis of my 7 shares. AMZN is not a dividend growth stock, so the stock couldn't rely on dividends to accomplish this feat.

Today I'm presenting my 21st home run stock, and it's another growth stock that reached this milestone. Admittedly, I am quite surprised to see this stock beat Procter & Gamble (PG) to the punch, as I've been eyeing PG's share price for a few weeks expecting a home run!

Previous Home Runs

Here is a list of DivGro's previous home runs with updated total returns (and annualized total returns):
  • Home run #1: General Dynamics (GD) — up 58% (18% annualized)
  • Home run #2: Nippon Telegraph & Telephone (NTT) — closed for 125% gain (37% annualized)
  • Home run #3: Digital Realty Trust (DLR) — closed for 102% gain (44% annualized)
  • Home run #4: Altria Group (MO) — up 9% (3% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 99% (19% annualized)
  • Home run #7: Microsoft (MSFT) — up 406% (85% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 87% (28% annualized)
  • Home run #9: Northrop Grumman (NOC) — closed for 132% gain (46% annualized)
  • Home run #10: McDonald's (MCD) — up 150% (25% annualized)
  • Home run #11: AbbView (ABBV) — up 77% (18% annualized)
  • Home run #12: Lockheed Martin (LMT) — up 51% (29% annualized)
  • Home run #13: Raytheon Technologies (RTX) — up 21%
  • Home run #14: Netflix (NFLX) — up 159% (65% annualized)
  • Home run #15: Intel (INTC) — up 150% (22% annualized)
  • Home run #16: Valero Energy (VLO) — up 3% (1% annualized)
  • Home run #17: Aflac (AFL) — up 73% (15% annualized)
  • Home run #18: Apple (AAPL) — up 391% (83% annualized)
  • Home run #19: Xcel Energy (XEL) — up 125% (26% annualized)
  • Home run #20: (AMZN) — up 171% (68% annualized)
Once a position reaches home run status, it retains that status even if the stock price drops and the total returns dip below the 100% mark. Furthermore, if I buy additional shares of a home run stock at a higher cost basis, the calculated total returns could drop below 100% as well.

I recently reopened a position in NOC and I reinvested in DLR about eighteen months ago. NOC essentially is flat and DLR has returned 45% or 24% on an annualized basis. Any repeat position will have to produce total returns of 100% in order to earn home run status, just like any other stock in my portfolio.

Home Run #21

My 21st home run stock is (CRM), which exploded higher this week after the company reported stellar earnings and raised guidance. Additionally, CRM will join the Dow Jones Industrial Average, along with Amgen (AMGN) and Honeywell (HON), as Exxon Mobil (XOM), Pfizer (PFE) and Raytheon Technologies (RTX) get the boot.

CRM is not a dividend growth stock and my investment in the stock is purely for its growth prospects. For fun, I call CRM one of my future dividend payers. 

Here is a table showing the buy dates, number of shares, and cost basis of each lot of CRM shares:

The average cost basis of my 60 shares is $138.00. When CRM closed at $276.32 per share on 27 August, CRM officially became a home run stock in my portfolio.

Here is a price chart of CRM indicating my buys since 11 May 2018:

Home Run Contenders

I have two other positions that are very close to achieving home run status, Procter & Gamble (PG), and Taiwan Semiconductor Manufacturing (TSM). PG shows total returns of 99%, whereas TSM shows total returns of 97%. Another stock, Air Products and Chemicals (APD), has total returns of 91%.

I'm looking forward to celebrating my next home run very soon!

Concluding Remarks

Having more than doubled my average cost basis, CRM is the latest home run stock in my DivGro portfolio. It follows NFLX and AMZN as the other growth stocks in my portfolio that have achieved home run status.

I would love to add more shares to my growth stocks, but I want to wait for the market to pull back first. I expect the stock market to cool off soon, especially as we enter the last few months of the election season.

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