Beginners Portfolio: Apple Inc., Persimmon plc and Aviva plc Help Us To 46% Profit Against The FTSE 100’s 32%

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The Beginners’ Portfolio is a virtual portfolio, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.

The recent uptick in the FTSE 100 has helped the Beginners’ portfolio quite nicely, and we’re up across the board since my last check — since I made the first investment for the portfolio back in May 2012, we’re up 46%.

Against that, the FTSE 100 is up 32%. Our 46% does include dividends, but also accounts for spreads and dealing costs, and once those are deducted we’re on a more modest gain of 39%. But I’m still pleased with that, and occasionally kick myself for my disastrous mistakes in buying Quindell and for not spotting Blinkx’s overvaluation sooner — had I stuck 100% with solid blue chips, we’d be significantly ahead of today’s position now.

Of those blue chips, three stand out as big winners:


Shares in Apple (NASDAQ: AAPL.US) have stormed up 96% since I added them to the portfolio in January 2013, including dividends and after all costs, which is a remarkable performance for a stock that had already had such a great run. At $129 per share now, post-split, are they still good value?

It’s only eight years since the iPhone was first introduced, and 50% of the world’s adult population now owns a smartphone — and estimates suggest that will rise to 80% by 2020. Apple’s iPhones are still the desirable thing to have at the top end of the market, and the company is continually developing the services to back up its hardware. I’m holding.


Housebuilder Persimmon (LSE: PSN) has been in the portfolio since July 2012, and with the shares at 1,764p we’re sitting on a total gain of 192%. In the depths of the housing crisis when the whole sector was in the dumps, but the canny builders were building up huge land banks at knockdown prices, it seemed obvious to me that there were great bargains to be had.

Persimmon shares are still on a forward P/E of only 12, dropping to 10.5 for 2016, and is in the middle of a big cash-return programme. We’re even looking at PEG ratios of 0.7 for each of the next two years, which is classic growth territory.


And finally, another great example of buying quality shares when they’re being stomped on. Aviva (LSE: AV)(NYSE: AV.US) was crushed when it caved in to inevitability and slashed its final dividend in 2012, and I added some in May 2013. Since then the dividend has come bouncing back, and has helped us to a 73% total gain.

And again I think this is a stock that’s still cheap. There’s a doubling in EPS expected for the year just ended (with results due on 5 March), which would leave the 538p shares on a P/E of 11.4 — and that would drop to 9.5 on 2016 forecasts, with dividend yields heading back up to 4.7%.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.