Another positive week for the markets and all the Portfolios. Each of the portfolios can report new additions, while Portfolio 1 had a busy week increasing ownership in existing companies in the portfolio. Yes, I know the ownership is extremely small, but I can say I do own a bigger piece of them. 😊 Lots of activity this week so lets get at it…..
Market News
The Toronto Stock Exchange’s Composite Index (TSX) edged higher for the 13th straight day to end the week at a record high. The Energy and Financial sectors led the rise, while the Technology sector pulled back a little from recent gains.
In the US, all three indexes put up a third straight week of gains with the S&P 500 leading the way, followed by the Dow Jones Industrial Average (DJIA) with Nasdaq (NASD) bringing up the rear. The DJIA was propelled by strong earning in the Financials sector, while both S&P 500 and Nasdaq indexes were held back by the Technology and Communications sectors.
Here are the growth number for the four indexes since January 1, 2021:
Portfolio News
Continuing with the rising tide lifts all boats theme from last week, the continued rise in the markets lifted all three portfolios with Portfolio 2 leading the way. This week only Portfolio 2 beat the four major North American indexes. Cash in Portfolio 1 was once again deployed to buy additional shares in the better performing companies in the portfolio. The new shares have much greater growth potential than cash sitting on the sidelines. 😊 Portfolio 2 had another good week, led by MongoDB and Guardant Health. Finally, Portfolio 3’s increase was powered by a strong week from Cloudflare, goeasy and Brookfield Asset Management but that wasn’t enough to keep it from coming in last place.
Companies on the Radar
Rivian remains on the radar while waiting for it to go public. The rumoured IPO date is November 25 but I haven’t seen anything definitive. While Rivian has almost $1 Billion in debt, it does have a state of the art manufacturing plant, backing from Amazon and Ford, and supposedly over 145,000 pre orders (but who knows how many will turn into actual sales) .
Otherwise, it has been a busy week with 3 companies coming onto the radar and two of them making into two of the portfolios. I bought iAG Financial (TSX:IAG) for Portfolio 2 early in the week and International Petroleum Corporation (TSX:IPCO) for Portfolio 1 late Friday. The reasoning for each purchase is in the respective Portfolio Activity sections. The third company remaining on the radar is Crew Energy (TSX:CR).
I did not expect to look at another Oil & Natural Gas company, let alone actual invest in one, but while the world transitions to alternative fuel sources there has been a growing demand for oil with practically all oil companies benefitting. I might be a bit late to the party, but I hope to capitalize on the growing demand for oil and natural gas, especially as we enter the colder winter season.
When Crew Energy was brought to my attention, it sounded interesting so I decided to look a little deeper. As with most oil and gas companies, their price had been in decline for a few years but has continued to rise since March 2020. With unreliable renewable power supplies causing problems in Europe and low storage levels globally, the demand for natural gas is increasing. The company has experienced management with 12% insider ownership, so the leadership has skin in the game. While the world transitions to renewable energy supplies, there is still a need for oil and gas.
As with last week, I’m looking to add shares in the following companies, in no particular order:
- Innovative Industrial Properties (NYSE:IIPR)
- Visa (NYSE:V)
- Roku (NASD:ROKU)
- Nvidia (NASD:NVDA)
- Magnet Forensics (TSX:MAGT)
- Crew Energy (TSX:CR)
Portfolio Updates
Portfolio 1
Portfolio 1 for the week ended October 22, 2021: UP 
It was busy week for the portfolio with one new company entering and adding to six companies already in the portfolio.
Activity
Bought SEA Limited (NYSE:SE) This is the second purchase of SEA Limited. It’s a founder led, leading global consumer internet company with three core businesses: digital entertainment (Garena), an e-commerce platform (Shopee), and digital financial services (SeaMoney). These three businesses continue to grow while at the same time they provide tremendous optionality. SEA Limited has a dominant position throughout South East Asia (where the SEA comes from) and is expanding into Latin America & Europe.
Bought Cloudflare (NYSE:NET) This is the second purchase of Cloudflare in less than a year. The company continues to be a founder led as it rides the growing cybersecurity market. Its strong revenue growth has led to strong share price growth. As the world goes more and more digital there will be a growing need for cybersecurity and Cloudflare has quickly become one of the leaders in this field with it’s focus on “delivering secure, programmable network solutions that our customers rely on.”
Bought Trisura (TSX:TSU) In just over a year the share price for Trisura more than doubled and then had a four for 1 split. Not bad for an insurance company, albeit a specialty insurance company. The Canadian company continues has long term growth plans to continue expanding into the US as well as globally. As Trisura is not a Technology sector company but has strong growth, it made sense to increase the investment in it to balance the additional investment in the high growth Technology sector companies.
Bought Home Depot (NYSE:HD) Home Depot was purchased earlier this year, as a counterbalance to the purchase of Cloudflare and to diversify the tech heavy portfolio. While it’s share price has not increased at the same rate as Cloudflare or some of the other technology companies, Home Depot has continued to grow revenue and net income and the share price tends to follow earnings. As with Trisura, I like to use Home Depot to add balance and diversification to this portfolio. And a decent dividend doesn’t hurt.
Another factor in Home Depot’s favour, every time I have a home project or need a part for the home, Home Depot is the first, and usually last, place I go to get what I need. Judging from what I see in Home Depot I’m not the only one who thinks of Home Depot when something is needed for the home or a DIY project. Home Depot continues to benefit from sustained growth in home improvement, be it DIY or professional renovations.
Bought Trade Desk (NASD:TTD) Trade Desk is a leader in digital advertising, a relatively new and fast growing industry. The company continues to perform, posting increased revenue, net income and earnings per share. I like owning leaders in any industry but in a new and growing industry there is lots of room for Trade Desk to continue to grow and increase market share. My initial purchase of The Trade Desk was back in May and thanks to their strong performance the share price has gone up considerably since then.
Bought Crowdstrike (NASD:CRWD) Crowdstrike is another leader in their industry – cybersecurity. As with Cloudflare, cybersecurity is an expanding industry and of growing importance as the world goes digital, so lots of runway ahead. Utilizing Artificial Intelligence on its cloud-based platform, Crowdstrike has a rapidly expanding customer base, including a majority of the Fortune 100 companies and 14 of the top 20 banks. As well, it has strong customer retention, rapidly growing annual recurring revenue, and customers are increasing their IT spend on Crowdstrike module subscriptions.
Bought International Petroleum Corporation (TSX:IPCO) When Crew Energy was brought to my attention I immediately thought of IPCO which I’d heard of thanks to Motley Fool. This Canadian company is a spin-off of Sweden based Lundin Petroleum, with many of IPCO’s senior management coming over from Lundin. As with Crew Energy, with the rise in oil prices, the company has started to perform with revenue more than doubling in the first 6 moths of fiscal 2021 compared to 2020; and the company is net income positive again after being net income negative in 2020.
The same reasoning behind Crew Energy applies to IPCO, as the world transitions to renewable energy sources, there is still strong demand for oil. The reason I like IPCO compared to other oil companies is that its being managed for free cash flow and the judicious use of the cash (as pointed out by Motley Fool Canada).
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Algonquin Power & Utilities Corp (TSX:AQN)
US $
No US$ dividends this week.
Quarterly Reports
Selected highlights from their Q3 2021 presentation on October 19, 2021
- CN DELIVERS SOLID THIRD QUARTER RESULTS AND REAFFIRMS 2021 OUTLOOK
- Q3 ADJUSTED EARNINGS PER SHARE C$1.52
- Q3 EARNINGS PER SHARE C$2.37
- Q3 REVENUE ROSE 5 PERCENT TO C$3.6 BILLION
- CANADIAN NATIONAL RAILWAY – ON TRACK TO ACHIEVE STRATEGIC PLAN 2022 TARGETS WITH OPERATING PERFORMANCE IMPROVEMENTS AND COST INITIATIVES WELL UNDERWAY
Selected highlights from their Q3 2021 update on October 20, 2021
Cash:
- Operating cash flow less capex (free cash flow) of $1.3B in Q3
- Net debt and finance lease repayments of $1.5B in Q3
- In total, $164M decrease in our cash and cash equivalents in Q3 to $16.1B
Profitability:
- $2.0B GAAP operating income; 14.6% operating margin in Q3
- $1.6B GAAP net income; $2.1B non-GAAP net income (ex-SBC1) in Q3
Operations:
- Record vehicle production and deliveries in Q3
- Started roll out of FSD City Streets Beta to a wider population in October
Portfolio 2
Portfolio 2 for the week ended October 22, 2021: UP
Activity
Of the three portfolios, Portfolio 2 is probably the least invested in Technology companies, but it seems to outperform the other two. Hmmm. Didn’t expect that. In any event, I ventured into the Financial sector for the latest addition to this Portfolio.
Bought iA Financial (TSX:IAG) I saw this Canadian company mentioned in a September 27 Globe and Mail newsletter (I’m not a subscriber so I couldn’t see the article but the company sounded interesting). It turns outs iA Financial Group is a multi-faceted financial services organization providing individual and group insurance; individual wealth management; group savings and retirement services; auto and home insurance; and insurance operations in the US. On the financial side they have a strong Balance Sheet, showing no long-term debt with plenty of cash and equivalents; despite a blip in 2020 (didn’t most companies have a blip in 2020?) revenues continue to steadily rise; and they are cash flow positive. iA Financial has highly regarded, experienced leadership, and a very positive workplace culture (per Glassdoor).
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) DRIP
US $
No US$ dividends this week.
Quarterly Reports
No quarterly reports this week.
Portfolio 3
Portfolio 3 for the week ended October 22, 2021: UP
Activity
This week I decided to move a TD mutual fund from the TD Bank TFSA to the TD Direct investing TFSA, so all investments will be in one account. The mutual fund, TDB661 – TD US Index Fund, holds mainly large cap US stocks. The value of the mutual fund when it entered the portfolio was added to the starting total for the week in order to display the organic growth of the portfolio, otherwise the growth for the portfolio would have been misleading.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
No dividends this week
Quarterly Reports
No quarterly reports this week.