The Next Addition to My Portfolio
Sep 1st 2012 1:54PM
Updated Sep 1st 2012 1:58PM
At the beginning of the month, I identified five stocks that I was considering for addition to my modest portfolio. I've spent the past month researching the companies and have decided on what company will end up in my portfolio. It wasn't an easy decision, but ultimately one company stood out above the rest. That company is athletic-apparel maker Under Armour (NYS: UA) .
I still like the four companies that I am bypassing right now, and I considered adding a second company. However, Under Armour has done well over the past month, with only one other company in the group performing better:
Price, July 31
Price, Aug. 30
|Amazon.com (NAS: AMZN)||$233.30||$246.22||5.5%|
|Facebook (NAS: FB)||$21.71||$19.09||(12.1%)|
|LinkedIn (NAS: LNKD)||$102.65||$107.37||4.6%|
|Netflix (NAS: NFLX)||$56.85||$60.48||6.4%|
Source: Yahoo! Finance; prices as of market close on respective days.
Why they didn't make the cut
The first company to get cut was Netflix, despite its performance over the past month. One of my reasons for considering was the potential for a buyout, and though I didn't think one was imminent, there was also not any rampant speculation -- other than mine -- about potential suitors. I will be keeping an eye on the company, however, to see how its European expansion progresses.
Facebook was the next one eliminated, if only because I don't think that it has reached its bottom. I think it might be possible to wait a few months and still get decent value from the company. Its loss this month might have been accelerated by the end of its lockup period, but the company is still finding its way as a public company. Those billion users are still awfully tantalizing, but I still want to see a plan for making money beyond advertising.
The final two unsuccessful candidates, Amazon and LinkedIn, were both eliminated for the same reason. As much as I like these companies -- Amazon was a finalist back in March -- the sky-high valuations for both continue to give me pause. Amazon has been spending money to make money in the future, investing heavily in infrastructure improvements to enhance the customer experience. LinkedIn, like Facebook, is still a relatively young public company, but increasing revenues should increase earnings going forward. In any event, I think either of the companies could still see massive growth over the next few years and will remain firmly planted on my Watchlist.
Why Under Armour is my choice
It was a difficult decision, but Under Armour made the cut largely because I missed owning it. I had owned it in the past, and it was one of the first companies I paid attention to when I became serious about investing. Furthermore, with the lessons of Peter Lynch in mind, it truly is about investing in what you know. Under Armour produces a product that I use on a regular basis, but it is also led by a founder who has a vision for the future of his company. I'm glad that I will be back along for the ride.
Can't wait to add it
As soon as Motley Fool trading guidelines allow it, I will be adding Under Armour to my portfolio, but I will continue to keep an eye on the other companies as well. As I stated earlier this month in the article that started this all, all five companies could be a worthwhile addition to any portfolio. To follow along and see where these companies end up, feel free to add them to My Watchlist today.
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The article The Next Addition to My Portfolio originally appeared on Fool.com.Fool contributor Robert Eberhard will be purchasing Under Armour shares when allowed, but he holds no other position in any company mentioned. Follow him on Twitter, or check out his holdings and a short bio. The Motley Fool owns shares of Under Armour, Netflix, Amazon.com, LinkedIn, and Facebook. Motley Fool newsletter services have recommended buying shares of Amazon.com, Facebook, Under Armour, Netflix, and LinkedIn, as well as creating a bull put position in Under Armour. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
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