STOCK TO STUDY: T. Rowe Price Group, Inc ... - BetterInvesting

STOCKS | Growth Stocks
Colgate Is Slowing But Won’t Get the Brushoff
Trucking Firm Knight Adds Pickup to Portfolio
by Cy Lynch
Portfolio Overview: Reviewing Historical Returns
Since its start in October 2006, our model portfolio con -
sisting of the stocks featured in this column has a rel ative
return of 2.2 percent based on its annualized return of
7.7 percent compared with 5.5 percent for the stock market
as a whole — represented by the Vanguard VIPERs Total
Market ETF (ticker: VTI) over the same period. Although
that’s solid performance, and significantly better than most
mutual funds, we’d like to be closer to our goal of out -
performing the market by 5 percent over the long haul.
Fourteen of 26 features outperformed
the stock market
for an “accuracy” of 53.8 percent.
That percentage continues
to increase steadily and is within
striking distance of our target
range of between 60 percent and
70 percent.
Reviewing Business Performance
and Projections
All of our 18 current holdings is -
sued new financial reports since
my last column. Virtually all of them
performed generally as projected.
I chose, however, to adjust my
projected sales growth for two of
them.
Aflac (AFL) has continued to per -
form a bit better than expected
since being selected 17 months ago,
with sales growth increasing sub -
stantially during 2012 to 16.2 percent
over the trailing 12 months (compared
with my projected growth
rate of 8 percent). As a result, I in -
creased my projected sales growth
rate to 9 percent.
In contrast, Colgate-Palmolive’s
(CL) sales growth has continued
to slow over the past year, ranging
in the low- to mid-single digits.
There fore, I’ve lowered my projected
growth rate for the com -
pany to 5 percent from 6 percent.
Although slow, that rate is still a
bit faster than the economy and
isn’t overly alarming for a stalwart
company such as Colgate.
32 | BetterInvesting | March 2013
Teva Pharmaceutical
(purchased 12/1/10)
Teva Pharmaceutical
(purchased 6/30/11)
On the other hand, we’ll con tinue to monitor the
company going forward to assure that growth stabilizes
at a lower rate rather than continuing to decline.
As the accompanying table below reflects, the projected
total return for the model portfolio, at 19.1 percent,
and projected sales growth, at 11.3 percent, both exceed
our targets.
Staying on the Move
This month’s feature is a trucking company that’s been
named to Forbes Magazine’s Top 200 Best Small Com -
Knight, a Small Transport Firm, Has Recently Added Rail Services
% of % of Proj. Proj. Hist. return
1/17/13 portfolio portfolio sales total relative to
Stock value before KNX after KNX growth return market
$ 796.23 2.5% 2.4% 12.0% 31.3% (46.7)%
818.14 2.5 2.5 12.0 31.3 (31.8)
NetEase.com, Inc. 840.73 2.6 2.5 13.0 (28.5) (24.7)
Cognizant
(purchased 6/31/2008)
Cognizant
(purchased 8/6/2012)
2,165.47 6.7 6.5 20.0 25.4 96.9
1,621.21 5.0 4.9 13.0 25.4 10.6
Coach 1,273.58 3.9 3.8 13.0 24.4 12.9
Aflac 1,424.96 4.4 4.3 9.0 22.7 18.7
Bio-Reference
(purchased 1/12/10)
1,519.71 4.7 4.6 17.0 21.9 13.1
Bio-Reference
(purchased 2/1/11)
Bio-Reference
(purchased 12/28/11)
1,277.91 4.0 3.8 17.0 21.9 11.4
3,028.97 9.4 9.1 17.0 21.9 68.9
Cisco Systems 1,963.43 6.1 5.9 8.0 19.6 (18.2)
Landauer 1,027.11 3.2 3.1 8.0 19.4 1.3
WellPoint 793.36 2.5 2.4 2.2 19.3 (41.3)
Global Payments 1,190.11 3.7 3.6 11.0 19.0 (11.5)
Techne 1,163.16 3.6 3.5 10.0 18.7 (21.2)
ResMed 1,515.15 4.7 4.6 13.0 16.2 34.2
Walgreen 966.21 3.0 2.9 7.0 13.8 (28.4)
General Dynamics 1,934.20 6.0 5.8 5.0 13.1 (28.3)
Stantec 1,681.04 5.2 5.1 12.0 11.2 28.3
Johnson & Johnson 1,304.59 4.0 3.9 6.0 11.0 14.9
Oracle 2,173.61 6.7 6.5 7.0 10.6 96.9
Colgate-Palmolive 1,808.70 5.6 5.4 6.0 10.1 60.4
Totals before Knight 32,287.57 11.3 19.1
Knight Transportation 1,000.00 3.0 11.0 24.1
Portfolio Totals 33,287.57 11.3 19.3