In keeping with our Lunar New Year tradition, The Edge Singapore has selected 10 stocks for our virtual global portfolio of stocks listed outside Singapore. (See Table 1).
To recap, The Edge Singapore’s virtual portfolio of 10 stocks was incepted on Jan 24, 2020, with 10 stock picks. Our yearly portfolio returns for 2020, 2021, 2022 and 2023 were 98.1%, 13.1%, –9.8% and 25.8% respectively. Our virtual global portfolio’s overall performance since inception is significantly ahead of every comparable benchmark. (See Chart 1).
The motivation behind creating The Edge Singapore’s virtual global portfolio was to provide our readers who possess different risk and return profiles with a framework to guide their investment-related decisions. We urge readers and investors to determine their risk and return profile before investing in any stock and have reiterated this in most of the articles in our Financially Savvy column. It is also important to note that the stock picks are not a direct call to buy the company, instead, they should be used for further inspection and analysis before making the final call. Further, this portfolio’s purpose is to put money where our mouth is and to demonstrate that being a knowledgeable investor will likely lead to success in the stock market.
The key tenet of our investment strategy is to follow fundamental-based value investing. Essentially, we buy stocks that are trading below their intrinsic value as they are deemed undervalued. The intrinsic value of the company is determined based on our subjective valuation of the company using various fundamental indicators and analyses. Because not all companies are similar, businesses must be understood before any subjective valuation is done. As such, financial models and weightage on different fundamental indicators ought to be different for every company.
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For our 2024 global virtual portfolio, we have incorporated some lessons from the past selection of stocks. Picking the right markets to invest in is just as important as picking the right stocks to invest in. Generally, if an underperforming market is selected, it is likely that the stock would also be subject to general market sentiment and only strong results are likely to keep the company’s share price afloat. It is key for investors to determine whether the market is underperforming due to long-term structural reasons or just a short-term market shock. If the reason is the latter, one strategy that can be deployed is overweighting the worst-performing markets as they have a low base effect, which was one of the strategies used in our 2023 portfolio.
When it comes to individual stock selection, we believe selected companies should be substantially undervalued. The fundamentals that determine the intrinsic value of a company are subjective as the nature of every company is different based on the varying investor profiles. For example, the weightage of fundamentals such as revenue and cash would be different for a dividend-based in pared to a growth investor seeking high-growth stocks. For most of the stocks that are initially filtered and eventually selected for our 2024 portfolio, having a good cash flow generation ability and a decent balance sheet are the requirements.
The Edge Singapore’s 2024 portfolio will be constructed similarly to the 2023 portfolio, where 10 stocks are allocated equally, wherever possible. The 2023 portfolio was fully liquidated on Feb 16 and the 2024 portfolio’s start date will be on Feb 23, which is the day this issue is published online, using closing prices. After accounting for all returns and cash, the portfolio will begin with US$254,707 ($342,986). The 2024 portfolio will not account for transaction costs and exchange rate fluctuations in tracking the performance, like in previous portfolios. Dividends and capital changes to the stocks will be accounted for in tracking the performance of the portfolio.
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Similar to the previous instalments of the top 10 global stocks, we will have the flexibility to buy, sell, add or reduce stocks in the 2024 portfolio based on our discretion, which we will explain and justify before making changes. Readers can also follow the trackable virtual portfolio on EdgeInvest if they wish to utilise the information from our latest stock picks and portfolio changes for their own investment research, and also for portfolio transparency.
Happy Investing.
See also:
- Altria Group: Light up your portfolio with this undervalued stock
- Anicom Holdings: Make this stock your pet love
- Autodesk: CAD company designed to lead the market
- CrowdStrike Holdings: Keeping faith with this winner
- Games Workshop Group: Game-changing model maker that’s no fantasy
- Grab Holdings: Grab on for a ride as corner may have been turned
- Mondelēz International: Here’s where to dunk your money for sweet returns
- Nippon Paint Holdings: Growing steadily even as the paint dries
- Playtech: Wager on this stock amid a gaming supercycle
- Sunny Optical Technology Group Co: Strong earnings visibility for this optoelectronics player
Disclaimer: This is a virtual portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy or sell stocks, including the stocks mentioned herein. This portfolio does not take into account the investor’s financial situation, investment objectives, investment horizon, risk profile, risk tolerance and preferences. Any personal investments should be done at the investor’s own discretion and/ or after consulting licensed investment professionals, at their own risk.
