Capital is now available and we will be continuing to push forward with this journey.
The updates in this article will see this portfolio reach 19.1% of the goal
Last weeks change +1.2%
As always, a quick disclaimer – although my lack of experience may be apparent, I feel it is really important to make sure it is clear the perspective from which I am approaching this project…
Disclaimer:
I am not a financial adviser, and the information I share is based solely on my personal investment journey as an average individual. Please remember that past performance of the market is not a guarantee of future results. Always do your own research and consider seeking advice from a qualified professional before making any financial decisions. Only invest what you are willing to accept losing.
Last Week’s Portfolio Performance
Procter & Gamble (PG)
Procter & Gamble, a global leader in consumer goods, has announced its fiscal year 2025 second-quarter results. Their fiscal year runs from July to June, aligning with their operational calendar. This was something that confused me in the beginning as I assumed all business’s would report on a governments tax year.
Known for iconic brands such as Always, Bounty, Ariel, Oral-B, Olay, Pampers, and Vicks, Procter & Gamble had a strong quarter which saw the stock value increase by 1.8%.
Net sales increased by 2% compared to the same quarter last year, while net earnings surged by an impressive 33%. The strongest growth was seen in the healthcare and grooming sectors. Reviewing their balance sheet shows that Procter & Gamble’s cash and cash equivalents exceed their debt due within one year by 8.5%.
Simply Wall Street estimates the company is currently undervalued by 26.5% as of 24th January.
See Procter & Gambles warning report here.
Sandvik (SDVKY)
Sandvik also released its earnings report this month, showcasing solid performance in Q4. Key highlights include:
- Order intake up by 5% compared to Q4 2023.
- Adjusted earnings before interest, tax, and amortisation (EBITA) up 1%.
- Free operating cash flow increased by 18%.
- Diluted earnings per share rose by 1% to 3.42.
See Sandvik’s earnings report here.
Portfolio Performance Overview
My portfolio’s value increased by c.1% last week, adding £19.16 to its total. This outperformed the Vanguard S&P 500, which dropped by 0.51%.
Investments in Cameco and Sandvik have proven fruitful in the short term, with Cameco growing by 8.89% and Sandvik by 12.69%. Games Workshop also delivered strong returns, growing 7.03% last week.
However, Coca-Cola was the biggest loss in the portfolio, declining by 1.32%. There is growing concern about the company’s earnings as consumer preferences shift towards healthier beverages. That said, Coca-Cola’s financials remain solid, with current assets exceeding liabilities by nearly £3 billion and free cash flow above £9 billion. Simply Wall Street believes the stock is trading at 34.4% below its fair value.
Diluted Earnings Per Share (EPS) Explained
Above, it was mentioned that Sandvik’s diluted earnings per share had increased. Understanding diluted earnings per share (EPS) is a useful metric to help clearer picture of a company’s profitability and how it could potentially change if more shares are introduced into the market.
Here’s how it works:
- Start with Net Income
Net income is the company’s profit after all taxes and expenses have been paid. - Deduct Preferred Dividends
Preferred dividends are payments owed to preferred shareholders. These dividends are not available to ordinary shareholders, so they must be subtracted from the net income. - Divide by Weighted Average Diluted Shares Outstanding
The diluted shares outstanding represent the total number of shares in the market, including shares that could exist if stock options, warrants, or convertible bonds were exercised or converted.
For example:
- If a company earns £1 million in profit, and £200,000 is paid in preferred dividends, the remaining £800,000 is available to ordinary shareholders.
- If the weighted average diluted shares outstanding is 1 million, the diluted EPS is £800,000 ÷ 1,000,000 = £0.80 per share.
Why is this important? Diluted EPS shows a “worst-case scenario” for shareholders. If more shares are issued in the future, it would dilute the value of each existing share, making them slightly less profitable.
Trump’s Potential Impact on Canadian Trade
Donald Trump has raised concerns about potential tariffs on Canadian imports, with threats of up to 25%. During a recent speech, he suggested:
- The US does not need Canadian cars, lumber, or oil.
- Canada should either become a US state or pay tariffs to help reduce American debt.
Canada is keen to avoid a tariff war, but it remains uncertain how this will unfold. Updates on the situation are expected in early February.
At this stage, if the tariffs are implemented, I will not be looking to sell shares in Cameco but will expect to see a decline in the price per share.
Investments for the Week Ahead
This week, I’ll invest £100 into my portfolio, maintaining my current allocation strategy:
- 40% into ETFs: £40 will go into the Vanguard S&P 500.
- 40% into dividend stocks: £40 will be allocated to Realty Income.
- 20% into higher-risk stocks: £20 will go into AECOM.
By sticking to this strategy, I aim to build a balanced portfolio while progressing towards my £10,000 goal.
