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Top Stock Picks 2011 – Q3

Over the past couple of years, a group of bloggers have enlisted in a friendly competition as to who can pick the best stocks for the year. This time around, I was a little less aggressive and picked well known names that appeared to be relatively undervalued at the beginning of the year. My top stock picks for 2011 are: VISA, Royal Bank of Canada, Husky Energy, and Encana.

We did very well in Q1 returning 12.16% including dividends.  However, by the end of Q1, the market peaked and started it’s downward spiral in Q2 (8.06%) and has continued aggressively downwards in Q3.  Like my real life positions in my online stock broker accounts, my four stock picks have corrected with the markets and are in the red year to date.  Lets take a look at the damage.

My Top 4 Stock Picks for 2011

VISA (V) – Everyone knows VISA! The stock has recently sold off due to news that debit card transaction prices may be regulated in the US and VISA has a portion of their business in the debit market place. As one of the worlds most recognized names and the largest card issuer in the world, I’m betting that the stock price will bounce back. Trading price as of Jan 3, 2011: $70.38 (open).

This stock has been my star thus far in the year with a return of 20.19% by the end of the second quarter.  Even with all global markets pulling back in Q3, Visa has resisted the trend.  Trading price as of Sept 30, 2011 closing: $85.72.  Combined with a $0.45 dividend brings a gain of 22.5% year to date. Disclaimer: I own shares of V.

Royal Bank of Canada (RY.TO) – Although Royal Bank is the largest bank in Canada in terms of market cap, it has been severely under performing relative to the other big banks in Canada. As with all the big 5 banks, RY sports a healthy dividend and I’m hoping that RY bounces back this year! Trading price as of Jan 3, 2011: $52.32 (open). Disclaimer: I own shares of RY.TO.

By the end of the second quarter, Royal Bank returned 7.24%, unfortunately, financials have been relatively weak in this correction especially RY. Trading price as of Sept 30, 2011 closing: $48.06.  Combined with a $1.54 dividend brings a loss of 5.2% year to date. Disclaimer: I own shares of RY.

Husky Energy (HSE.TO) – I picked this one a couple years ago and I’m picking it again for some oil exposure. They own oil producing assets in NL, new assets in China in addition to paying a healthy dividend. Trading price as of Jan 3, 2011: $26.55. Disclaimer: I own shares of HSE.TO.

Oil and commodities continued their decline in the third quarter, to the point where the whole sector is attractively priced.  Trading price as of Sept 30, 2011 closing: $22.69.  Combined with a $0.90 dividend brings a loss of 11.2% year to date. Disclaimer: I own shares of HSE.

Encana (ECA.TO) – A little while back, Encana split into two companies to divide their natural gas and oil operations. CVE took over the oil side, and ECA took the natural gas. Last year, I picked CVE which was a winner, but this year, I’m going to try my luck with ECA. Even though I’m not bullish over natural gas prices, ECA appears cheap with low Price/Earnings, Price/Book ratios and the dividend does not hurt either. Trading price as of Jan 3, 2011: $29.09

I should have known better than to play with natural gas!   Encana being a natural gas play has been hammered this correction.  While it drags my return in this competition, I’m glad that I did not pick this one up for my real dividend portfolio at the beginning of the year! Trading price as of Sept 30, 2011 closing: $20.17.  Combined with a $0.58 dividend brings a loss of 28.7% year to date.

With the extreme volatility in Q3 2011, there were very few places for investors to hide.  The average of my four stock portfolio is a loss of 5.65% year to date (from +8% in Q2).  While being negative hurts, the positive is that the portfolio still beat the S&P/TSX 60 Index (XIU).  XIU started the year worth $18.71 but closed out the quarter worth $16.66.  Combined with a $0.34 in dividend brings a year to date loss of 9.1%

Here are the other results:

  1. Dividend Growth Investor: 3.39%
  2. Intelligent Speculator: 3.19%
  3. Million Dollar Journey:  -5.65%
  4. Money Smarts Blog: -13.17%
  5. Where Does All My Money Go: -18.12%
  6. The Financial Blogger: -20.31%
  7. My Traders Journal: -35.82%
  8. Wild Investor: -37.26%
  9. Beating The Index: -45.07%

Some of the Canadian Money Forum members are having their own stock picking contest, which I suspect will be updated soon! For those of you who made picks within the comments on the first stock picks post, how did you do?







7 Comments, Comment or Ping

  1. Thanks for this post, I was curious how your picks were performing to “plan”!

  2. Hey Mark, all disclosure is in the post above. I have positions in all except ECA.

  3. 3. trevor

    Looks like dividends is the place to be.

  4. 4. scovidiu

    Your contest should be called “Money losing contest” or “Let’s give our money to Wall Street Speculators”.

  5. Ouch for poor Beating the Index! Down 45%, sort of an ironic statement right below that moniker.

  6. 6. Blair

    What was the DJI over the same period? (corrected for dividends)

    If it’s like last years results. The group of experts averaged worse than the index. You’re better off letting a monkey throw darts.

  7. Nice selection of stocks FT.

    I recently bought a position in RY.T -lI think it’s been under-performing given the departure from most of their US operation. I would like to see some share price appreciation, despite the fact it’s a long-term hold.

    I read today in the Globe that Encana is involved in a $5-billion-plus project that would for the first time ship Canadian natural gas to buyers in Asia. The Kitimat LNG project is a three-way joint venture that includes Encana and two other US energy companies. Interesting stuff indeed. I do have a position in CVE, but not ECA.

    Nice update! It’s fun to read about his project.

    Have a great weekend,
    TWC

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