The Market Oracle Stock Portfolio
Portfolio / Investing Oct 29, 2005 - 03:50 PM GMTBy: Nadeem_Walayat
The aim of the Market Oracle Portfolio is to present a long-term income and growth portfolio, with a starting capital of some £20,000. The Portfolio actually mirrors my own portfolio as virtually all of the stocks mentioned here form part of my investment portfolio, as nothing engages ones mind than if one has ones own money on the line ;).
The portfolio has 3 key types of stock selected :
1. Income - This is likely to form the bulk of the portfolio, as high dividend stocks tend to be more stable as long as they continue to pay high dividends, but also with an eye on capital growth from these stocks.
2. Capital Growth - There is some overlap with Income Stocks as many of the capital growth stocks also inline with the philosophy of the portfolio i.e. safety and long-term investment provide good dividend yields. The actual allocation is more on a sector basis where those sectors likely to perform the best are targeted.
3. Speculative- This is a small section of the portfolio and as the name suggests are very long-term punts, the whole allocation is to be kept to below 10%.
Charges - To make the portfolio more realistic, buying and selling charges will be applied at a flat fee of £12, in addition to stamp duty for purchases at 0.5%. Therefore the Opening structure of the portfolio is as follows, with a short briefing on the stocks selected
Income
United Utilities - Britain's largest Water company - Providing a high yield of 7% which more than makes up for the poor growth prospects and ensures a floor under the share price should a market downturn occur. Typical price range is about £6 to £7, so an entry at current prices is near the bottom of the range and represents good value with the Big dividend due to go ex in December !
British Telecom - On a high yield, BT is undervalued, and represents a good long-term investment for dividends and growth should the overlooked telecom's sector perk the interest of fund managers. The Stock has shown a range of £2 to £2.35, hence current prices are at the bottom of the range and at a good point to buy !
Lloyds TSB - On a low PE of and high Yield of nearly 8% !!!. Although growth is limited compared to the likes of HBOS, the strong dividend is a good substitute as well as a chance of future, as rumours continues to rumble on i.e. the latest possible suiter is Wells Fargo. If a bid did occur the stock would be trading at £6+ plus, but in the meantime we can collect the healthy dividends/. The range for this share is £4 to £5.00 and currently trading in mid range, the support along £4 is exceptionally strong, and thus the stock represents a safe long-term investment.
British American Tobacco - The company goes from strength to strength, as recent results show the company goes from strength to strength ! BAT is in a long-term solid uptrend with corrections usually less than 50% of the preceding upswing a sign of a very strong trend, and one to get on during any correction, i.e. the current correction.
Capital Growth
BP- As oil is the sector is apparently the one to be in, BP will benefit with strong earnings growth with crude trading at current high levels as the worlds largest oil producing company. BP is looking to capitalise on the inflow of cash from the high oil price via a serious of investments and acquisitions across the board which give BP good long-term growth prospects. In addition to this BP continues to buy back stock and support the price. Even despite Katrina BP posted a 16% increase in profits as per their last results. Of all the oil majors BP is now the largest producer of oil. The chart technically shows support at £6, and is targeting the previous peak at £7. The trend is solid and suggests that the uptrend to and above £7 will resume, especially given the strong fundamentals.
Tate & Lyle - In one word 'Sugar' , which given the recent run up in other commodities suggests Tate could go much higher on a Sugar bull market ! After the peak early in the year at £5.50, Tate has been hugging support at £4.50, which held despite the recent sharp market correction, this reinforces £4.50 as an exceptionally strong price area. This suggests the stock is an excellent buy at current prices and is targeting the previous high of £5.50.
BHP Billington - Another commodities bull market play is in Mining supplying the emerging giant china with copper and other metals. Even if the metals do correct, given the surge, with china and india continuing to grow at 6 to 10% each, the demand is likely to remain for the forseable future and hence support prices. So this is the portfolios exposure to the mining sector. The chart confirms a strong uptrend with support at £7.80 and presently targeting a break of the £9.20 high for a continuation of the uptrend.
Speculative
Enodis - I have had an interest in ENODIS for several years, this small catering company continues to provides good profits growth. Recently Aviva purchases a 10% stake in the company. The company has come a long way in the last 2 years from 30 pence to now at £1.27, given the earnings prospects the shares look under valued on a PE 13. So even my speculative pick, is not exactly a dog stock, but one that provides a profit and pays a dividend.The portfolio will be periodically updated quarterly or earlier. The aim of the portfolio is to Grow ! Grow ! Grow ! Not just to beat say the FTSE but to grow as much as possible, given the personal stake :)
Market Oracle Portfolio - 28/10/05
| Stock | Ticker | Date buy | Price paid | Quantity | Total Book Cost | Cur Price | Dividends | Cur Value | Val+Divs | Gain/Loss | % Gain/Loss |
| United Utilities | UU | 28/10/2005 | £6.12 | 500 | £3,087 | £6.12 | £0 | £3,060 | £3,060 | -£27 | -0.9% |
| British Telecom | BT.A | 28/10/2005 | £2.07 | 1000 | £2,092 | £2.07 | £0 | £2,070 | £2,070 | -£22 | -1.1% |
| Lloyds TSB | LLOY | 28/10/2005 | £4.49 | 500 | £2,268 | £4.49 | £0 | £2,245 | £2,245 | -£23 | -1.0% |
| Tate & Lyle | TATE | 28/10/2005 | £4.53 | 500 | £2,288 | £4.53 | £0 | £2,265 | £2,265 | -£24 | -1.0% |
| British American Tobacco | BATS | 28/10/2005 | £12.05 | 200 | £2,434 | £12.05 | £0 | £2,410 | £2,410 | -£24 | -1.0% |
| BP | BP | 28/10/2005 | £6.18 | 300 | £1,875 | £6.18 | £0 | £1,854 | £1,854 | -£21 | -1.1% |
| BHP Billington | BLT | 28/10/2005 | £8.15 | 300 | £2,469 | £8.15 | £0 | £2,445 | £2,445 | -£24 | -1.0% |
| Enodis | ENO | 28/10/2005 | £1.27 | 800 | £1,033 | £1.27 | £0 | £1,016 | £1,016 | -£17 | -1.6% |
| Cash | £2,454 | ||||||||||
| Totals | Original capital (28/10/05) | £20,000 | £19,819 | -£181 | -1% | ||||||
Portfolio Transactions this period (since last update)
| Date | Type | Stock | Qty | Price | Charges | Amnt £ | ||
| 28/10/2005 | Buy | UU | 500 | £6.12 | £27.30 | -£3,087 | ||
| 28/10/2005 | Buy | BT | 1000 | £2.07 | £22.35 | -£2,092 | ||
| 28/10/2005 | Buy | Lloyds TSB | 500 | £4.49 | £23.23 | -£2,268 | ||
| 28/10/2005 | Buy | British American Tobacco | 200 | £12.05 | £24.05 | -£2,434 | ||
| 28/10/2005 | Buy | BP | 300 | £6.18 | £21.27 | -£1,875 | ||
| 28/10/2005 | Buy | BHP Billington | 300 | £8.15 | £24.23 | -£2,469 | ||
| 28/10/2005 | Buy | Tate & Lyle | 500 | £4.53 | £23.33 | -£2,288 | ||
| 28/10/2005 | Buy | Enodis | 800 | £1.27 | £17.08 | -£1,033 | ||
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