Practical Investing portfolio
has included about $15,000 in cash since last spring, when I sold a
few stocks. I've wanted to put the cash to work but have held back
because of the market's stunning run-up in 2013. But when stock
prices started to plunge because of investor anxiety over the
government shutdown and the possibility that the U.S. could default
on its debt, I started hunting for bargains.
I realize that the bulk of the civilized world loves to buy
stocks when prices are rising. But because of my contrary nature, I
get nervous when other investors are confident -- and I get giddy
when everyone else is running for cover. Bottom line: I prefer to
shop when stocks are on sale.
The selloff stemming from Congress's temporary insanity was just
what the stock doctor ordered, so I pulled out my wish list of
companies, many of which have been recommended by Kiplinger in the
past. I settled on an airline called Copa Holdings (symbol
Copa was one of our picks for
The World's 10 Best Stocks
. Much of Copa's success stems from its location in Panama City,
the main crossroads between North and South America. Because Panama
recognizes that many of the passengers who land at Tocumen
International Airport are just passing through, it doesn't require
them to go through customs or bother with passports or visas unless
they leave the airport. That makes Tocumen a favorite hub for
travelers in a hurry, and it has helped Copa grow and keep its
Some key measures of airline performance illustrate Copa's
success. In the first nine months of 2013, the airline reported an
18% gain in revenue passenger miles (filled seats times miles
traveled) and a 16% increase in available seat miles (number of
seats times miles flown). Copa is planning a major expansion, with
five planes on order and options to buy 14 more. Analysts expect
earnings to grow by 21% in 2014.
I was delighted to find that, despite this impressive growth,
the stock sold for just 12 times estimated 2014 profits. Copa was
cheaper than two other well-run carriers, Spirit Airlines (
) and Southwest Airlines (
). Plus, Copa offered a dividend yield of 1.9%; Southwest yielded
just 1%, and Spirit, which has made me a bundle, pays no dividend.
So on October 2, I bought 100 shares of Copa for about $138
Thanks to the growing popularity of airline stocks, I already
have a tidy profit on Copa. By November 1, a month after my
purchase, Copa was up to $151.
Aside from that one move, I have left the portfolio alone. But
like the market, it's soaring in value. Some of that, of course, is
just the rising tide lifting all boats. Some, however, stems from
positive developments at the companies in which I've invested.
) has been one of my portfolio's consistent laggards. But it jumped
14% a day after it announced that it had inked a deal with South
Korean electronics giant Samsung that will likely boost its
revenues by $2 billion annually.
), another stock in the portfolio, got a lift when it reported that
its earnings were better than the miserable results that analysts
had expected. The upbeat report also lifted my shares in Intel (
), which has been desperately trying to diversify its product line
so its fortunes won't forever be linked to those of its partner in
the "Wintel" personal computer alliance.
My Practical Investing portfolio
, which a month ago was up 36% from its inception, is now up 37%.
I'm not complaining, but I have to admit that this relentless stock
market rally is making me a little nervous.