If at first you don’t succeed, pick a whole new slate of stocks and try again.
Welcome to the start of the second annual Globe and Mail Investing Club, where intrepid reporters test their acumen against the broader market and the good sense of our readers with a selection of 10 stocks to ride out the coming year.
Remember our picks from the last challenge? Yeah, they were mostly garbage: They underperformed pretty much every benchmark and inhaled the fumes of our readers’ far more enlightened picks, which outperformed the S&P 500 and demolished the S&P/TSX Composite Index.
This year’s challenge will resemble last year’s version in most ways. We’ll start with our own picks, which we will again call the Globe Hot List (try to stifle your laughter, please).
We invite readers to submit up to three stock picks of their own, through a handy form accessible on our website. To weed out penny stocks and other oddities, we’re limiting this year’s submissions to stocks that trade on the Toronto Stock Exchange, the New York Stock Exchange or the Nasdaq.
The participant with the best performance in the 12 months starting June 1 – in Canadian-dollar terms, with dividends; no trading allowed – wins bragging rights. We’ll also compile the 10 most popular stocks, based on how many times they appear in your submissions, to create the new Readers’ Portfolio. No pressure, but the portfolio did really, really well in the first contest that ended March 13.
The purpose of the challenge, though, isn’t entirely about smashing the competition.
We are hoping that the experience will be a source of discussion about investing and the many factors that can lift – and pummel – share prices.
Will AI stay hot as an investing theme? Has the meme-stock phenomenon returned? Are lower interest rates coming? Is the U.S. presidential election worth factoring in? We expect a lot of twists and turns over the next 12 months.
Most of all, the challenge should be a fun way to participate in the investing process and shed some light on how thrilling – if difficult and sometimes frustrating – it can be.
Globe Investing Club members smashed index with stock picks. And one competitor stood out
This time around, given the poor performance of the Globe Hot List last year, we’ve doubled down on our fundamental equity analysis, consulted stochastic indicators and hit the pavement in search of hidden opportunities.
Okay, that’s not true. We know we’re not pros, whose careers rest on outperforming major benchmarks. We’re entering the Globe and Mail Investing Challenge fully aware that what appears to be attractive today might look silly in several months.
Our approach is simple: We asked our colleagues – both on the investing team and across Report on Business for ideas – then assembled their picks in a manageable portfolio of 10 stocks.
Our portfolio has a clear home-country bias and is not diversified in any way. Nor is there is a unifying theme tying these picks together, such as betting on falling interest rates or ripping economic activity. These are simply individual ideas we think can do well over the next year.
Vancouver-based Copperleaf Technologies Inc. CPLF-T is a small Vancouver-based software firm that provides corporate analytics. The stock has fallen sharply from its debut in late 2021, but rising revenues and a rebounding share price mark this stock as a comeback play.
Xenon Pharmaceuticals Inc. XENE-Q is a Canadian biotech that is developing a treatment for epilepsy. It looks like an attractive target for a bigger pharmaceutical firm.
Northland Power Inc. NPI-T is a bet on renewable-energy companies coming back in favour. We can’t help but notice that the clothing sold by Aritzia Inc. remains supremely popular with young women. MDA Space MDA-T, formerly MDA Inc., is a space technology provider with a solid order backlog and low visibility among investors – so far.
We have also added a number of significantly larger companies. Starbucks Corp. SBUX-Q, our sole U.S. stock, is trading close to two-year lows, but the company has everything it needs to reward investors who buy on a dip: Coffee and a killer ordering app.
Alimentation Couche-Tard Inc. ATD-T, the convenience store operator, is a deal-making powerhouse that is on a roll.
Nutrien Ltd. NTR-T has been suffering from low fertilizer prices, but we think that dismal investor sentiment is the base for a didn’t-see-that-coming rebound later this year.
Railway stocks tend to deliver enviable long-term returns, so we’ve chosen Canadian Pacific Kansas City Ltd. CP-T, which is struggling for direction this year, as a test. Another biggie: Brookfield Corp. BN-T, which is an intriguing bet on beaten-up commercial real estate.
Will they all emerge as winners? That’s the hope, but definitely not our expectation.
One of the key takeaways from last year’s challenge was that you don’t need a full slate of outperforming stocks to do well.
A few standouts may be enough to propel a portfolio to impressive gains. The market-beating performance of the Readers’ Portfolio, for example, rode the AI-theme to great heights last year.
Just as important, though, a winning portfolio needs to avoid major missteps that can torpedo performance. A few ugly laggards were enough to sink our fortunes in the first contest. So, obviously, we’re hoping that the underperformers in our new slate won’t have much influence on the broader portfolio.
But that’s enough about us. We want to hear from you now. Please send us your three stock picks and we’ll get this challenge up and running.