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Thursday, October 29, 2020

Home Run Number 24

In August I celebrated three home runs, a designation I give to any stock in my portfolio when its total returns exceed my initial investment for the first time. (CRM) became my 21st home run stock when it exploded higher following stellar earnings. Shortly thereafter, Procter & Gamble (PG) became my 22nd home run, and Taiwan Semiconductor Manufacturing (TSM) achieved the feat a day or so later, becoming my 23rd home run stock.

Today I'm presenting DivGro's 24th home run stock. Like CRM, it is a growth stock that doesn't pay dividends, yet. I call these my future dividend growth stocks!

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 38% (11% 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) — down 4% (1% annualized)
  • Home run #5: Reynolds American (RAI) — closed for 180% gain (53% annualized)
  • Home run #6: Main Street Capital (MAIN) — up 87% (16% annualized)
  • Home run #7: Microsoft (MSFT) — up 360% (73% annualized)
  • Home run #8: UnitedHealth Group (UNH) — up 83% (25% annualized)
  • Home run #9: Northrop Grumman (NOC) — closed for 132% gain (46% annualized)
  • Home run #10: McDonald's (MCD) — up 155% (25% annualized)
  • Home run #11: AbbView (ABBV) — up 55% (13% annualized)
  • Home run #12: Lockheed Martin (LMT) — up 39% (19% annualized)
  • Home run #13: Raytheon Technologies (RTX) — up 6%
  • Home run #14: Netflix (NFLX) — up 148% (56% annualized)
  • Home run #15: Intel (INTC) — up 128% (18% annualized)
  • Home run #16: Valero Energy (VLO) — down 20% (5% annualized)
  • Home run #17: Aflac (AFL) — up 64% (14% annualized)
  • Home run #18: Apple (AAPL) — up 354% (73% annualized)
  • Home run #19: Xcel Energy (XEL) — up 132% (26% annualized)
  • Home run #20: (AMZN) — up 156% (58% annualized)
  • Home run #21: (CRM) — up 72% (36% annualized)
  • Home run #22: Procter & Gamble (PG) — up 98% (15% annualized)
  • Home run #23: Taiwan Semiconductor Manufacturing (TSM) — up 107% (54% 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 down about 14% and DLR has returned 42% or 20% 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 #24

My 24th home run stock is Pinterest, Inc (PINS). 

In January I read an interesting article on Pinterest and decided to buy a $24 call option expiring in August, while PINS was trading below $23. The call option cost me $355, so to break even PINS would have needed to trade above $27.55 per share on 21 August. As it turns out, PINS closed at $34.19 on 21 August, well above that breakeven point and so justifying my speculative options trade. The option was assigned and I bought 100 shares of PINS at an effective cost basis of $27.55 per share.

The stock exploded higher after stellar Q320 results, trading as high as $68.93 before settling down and closing at $62.51 today. This means PINS has become DivGro's fastest home run, achieving that status in only 69 days!

Here is a table showing the buy date, number of shares, and cost basis of my PINS shares:

Given the cost basis of $27.55, when PINS opened at $61.12 per share this morning, the stock officially became a home run stock in my portfolio! That equates to returns of 127%, which is not bad for a short investment of 69 days!

Home Run Contenders

Given the market volatility, it might take a while before I can celebrate another home run. 

With total returns of 88%, QUALCOMM Incorporated (QCOM) is the primary contender for home run status. Following close behind is Cummins Inc (CMI) with total returns of 86%. Another stock, Lowe's Companies, Inc (LOW) made it to within a penny of becoming home run status, but the market action earlier this week deflated LOW's attempt and the stock now sits on total returns of 79% returns. 

Concluding Remarks

With total returns exceeding my initial investment, PINS is the latest home run stock in my DivGro portfolio. PINS is the fastest to achieve home run status, by far... just 69 days! 

Cheers to another home run!

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