The Globe and Mail Investing Club Challenge has a promising new leader looking to take home the trophy. That’s us.
Almost four months into our yearlong challenge to compete for readers and Globe reporters, our 10 stocks are up an average of 16.8%, excluding dividends, as of Sept. 26.
Our portfolio outperformed the S&P 500 Index’s 8.9% gain and the S&P/TSX Composite Index’s 7.9% gain over the same period.
Stocks submitted by readers have gained an average of 5.3%.
But we will be the first to admit that this race is not over yet. Our portfolio will have to survive another eight months of market volatility, including further central bank interest rate cuts and the US presidential election.
As you may recall, earlier this year we asked our readers to submit their favorite three stocks. We will be tracking these entries for 12 months from 1 June and will announce the winning individual’s performance next year.
We also track some large portfolios. The Leaders Portfolio consists of the 10 most popular stocks based on posts. We also created our own 10-stock portfolio called the Hotlist.
Shares are held for one year without being traded. Winners get bragging rights.
The two approaches to stock selection could not be more different. Indeed, there are no duplicate names.
The Leaders Portfolio leans heavily towards technology themes, particularly artificial intelligence, accounting for six of its 10 holdings. The rest are bets on energy stocks and very unpopular stocks that offer big dividends. We plan to include these in future updates.
While earnings have lagged major benchmarks, there are some stocks with solid gains that have outpaced the market.
Shopify, an Ottawa-based software company that operates e-commerce sites, achieved strong sales and profit growth in the second quarter, which helped fuel an 18% rise in its stock price on Aug. 7.
Readers who bought into the stock on a steep sell-off long before this good earnings news arrived took advantage of the 34.9% rally.
Constellation Software Inc. is another Canadian-based tech stock that is on the rise.
The company invests in promising software developers and is a leading company that has delivered an average annual return of 33.4% to long-term investors over the past 10 years. The stock is on pace to rise 17% since the challenge began.
Another notable stock is an unpopular pick that is showing early signs of recovery.
Toronto-Dominion Bank is struggling with an impending fine related to a U.S. investigation into its anti-money laundering efforts, and until mid-June it was lagging among the Big Six banks in 2024.
Since then, the stock price has risen as investors accepted the hefty dividend and tattered valuation. This choice increased reader profits by 12%.
Unfortunately, the AI theme was uneven. NVIDIA, a big outperformer in 2023, is up 13.1% since this challenge began, while Microsoft is up less than 4% over the past four months.
As concerns about economic activity in the United States and China smolder and crude oil prices slump, the performance of energy stocks has deteriorated. Tourmaline Oil Corp. and Canadian Natural Resources Inc. both downgraded their Leaders portfolios.
So what is right for us?
The Globe’s Hot List got off to an auspicious start when Copperleaf Technologies Inc. became involved in an acquisition deal that added a hefty premium. We locked in a 44.5% gain in this one stock.
But we are not a one-hit wonder.
Aritzia Inc. is up 50.8% since the start of the challenge amid hopes of success in the Canadian fashion retailer’s U.S. expansion. MDA Space Inc. is also up about 46% as investors grow more confident in the satellite and robotics company’s long-term growth prospects.
Good news for our readers. There is still plenty of time for the AI theme to gain traction.
