The Globe and Mail Investing Club Challenge has a promising new leader that is threatening to grab the trophy: us.
Nearly four months into the one-year challenge, which pits readers against Globe reporters, our 10 stock picks are up an average of 16.8 per cent, as of Sept. 26, not including dividends.
Our portfolio is outperforming the 8.9-per-cent rise in the S&P 500 and the 7.9-per-cent gain in the S&P/TSX Composite Index over the same period.
The stocks submitted by our readers are up an average of 5.3 per cent.
But we’ll be the first to acknowledge that this race isn’t over yet. Our portfolios must get through another eight months of market-moving curveballs, including additional central bank interest-rate cuts, a U.S. presidential election and who knows what else.
As you may recall, we asked readers earlier this year to submit their three favourite stocks. We’re tracking these submissions for 12 months, starting June 1, and will announce the winning individual performance next year.
We are tracking a couple of larger portfolios, too. The Readers’ Portfolio consists of the 10 most popular stocks based on submissions. We also assembled our own 10-stock portfolio, called the Hot List.
Stocks are held for a full year, without trading. The winner takes bragging rights.
The two approaches to selecting stocks couldn’t be more different. Indeed, there is not a single overlapping name.
The Readers’ Portfolio leans heavily toward technology – and, more specifically, the artificial intelligence theme – which drives six out of the 10 holdings. The rest are bets on energy and deeply out-of-favour stocks with big dividends, which we will include in later updates.
While the performance lags major benchmarks, a few stocks stand out with solid market-beating gains.
Shopify Inc., the Ottawa-based software company that powers e-commerce sites, delivered strong revenue and profit growth in its second quarter, which underpinned an 18-per-cent rally in the share price on Aug. 7.
Readers, who scooped up the stock on a significant selloff well before the arrival of this good earnings news, have ridden a rebound of 34.9 per cent.
Constellation Software Inc. is another Canadian-based tech stock that has been powering ahead.
The company, which invests in promising software developers, is a powerhouse that has rewarded long-term investors with average annualized gains of 33.4 per cent over the past decade. Since the start of the challenge, the stock is on pace with a gain of 17 per cent.
The other standout is an out-of-favour pick, which is showing early signs of rebounding.
Toronto-Dominion Bank was a 2024 laggard among the Big Six banks through mid-June, as the lender struggled with looming financial penalties associated with a U.S. investigation into its anti-money-laundering efforts.
Since then, the stock has moved up as investors embrace a big dividend and beaten-up valuation. Readers have gained 12 per cent on this pick.
Unfortunately, the AI theme has been uneven. Though Nvidia Corp., a massive outperformer in 2023, has gained 13.1 per cent since the challenge began, Microsoft Corp. is up less than 4 per cent over this four-month period.
Energy stocks are doing worse, as the price of crude oil meanders with simmering concerns about economic activity in the United States and China. Both Tourmaline Oil Corp. and Canadian Natural Resources Ltd. have dragged down the Readers’ Portfolio.
So what’s going right for us?
The Globe’s Hot List got off to a lucky start when Copperleaf Technologies Inc. was gobbled up in a takeover deal that added a handsome premium. We’ve locked in a 44.5-per-cent gain on this one stock.
But we’re no one-hit wonder.
Aritzia Inc. is up 50.8 per cent since the start of the challenge, amid promising success in the Canadian fashion retailer’s U.S. expansion. And MDA Space Ltd. is up about 46 per cent as investors gain confidence in the satellite and robotics company’s long-term growth prospects.
The good news for readers: There is still plenty of time for the AI theme to build some momentum.