Two test portfolios

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I started two test portfolios near the beginning of the month.

Portfolio 1:

  • GV 100 shares
  • MUX 100 shares
  • CRNT 105 shares

Portfolio 2:

  • MEET 150 shares

My intention was to start both portfolios with $1,000 and have one diversified among a few low cost stocks and have the other fully invested in a single stock. 

After several weeks I have made some observations.

Portfolio 1

    Purchased GV, MUX (100 shares each) July 1.
    Purchased CRNT (105 shares) July 15.

The net gain of this portfolio is 1.72%.

GV and CRNT have generated an ROI of 2.9% and 2.1% respectively. 

MUX has generated an ROI of -7.57%.

Clearly MUX is pulling down this portfolio. Still, even without the effect of MUX, the best this portfolio has produced so far has been in the 2-3% range. 

Portfolio 2

Purchased 150 shares on July 5.

The net gain of this portfolio is 8.61%.

MEET has generated an ROI of 10.05%. Even though I purchased it almost a week after the bulk of Portfolio 1, it has single handedly outoerformed the stocks in the other portfolios.

What’s the critical difference?

What is the critical difference between MEET and the other stocks? What patterns can I look for in the charts that would help identify future performers?

I believe the difference is in the EPS.
MEET has an EPS that has been in positive territory for the entitety of the last 52 weeks. Not only is it in positive territory, it has been increasing over time. A decent upward staircase, currently at $0.32.

The EPS for MUX busted above the zero line only since April. It’s been slowly increasing since, and was increasing for most of the 52 week period, and remains barely above the zero line at $0.05. They took a dip from January to about April.

The EPS for GV has been hovering barely above the zero line until April and has increased to $0.48 since.

The EPS for CRNT shows the same kind of dip from January to late March/early April as MUX and is currently at $0.15.

Conclusion

I started writing this article expecting to find that MEET has an EPS that separates it from the other stocks so that I could make the argument that it’s performance could have been predicted from its EPS line.

What I found was that its EPS sits between the EPS’s for GV and CRNT.

It may be more appropriate to make the argument that MUX has an EPS line that separates it from the other stocks and could be used to predict its performance. I’ll be watching MUX closely over the next few days and wouldn’t be surprised if I end up removing it from my portfolio by the end of the week.

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