AvalonBay Communities Inc (AVB), Intel Corporation (INTC), Chevron Corporation (CVX): The Basic Needs Portfolio

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In May, I announced my intention to create a portfolio that embodied life’s basic needs. Understandably, many of the truly basic needs in our everyday lives have transcended far beyond just the need for water and shelter. To that end, over a period of 10 weeks I detailed 10 diverse companies that I think will outperform the broad-based S&P 500 over a three-year period because of their ability to outperform in both bull and bear markets, and command incredible pricing power in nearly any economic environment.

Intel Corporation (NASDAQ:INTC)

If you’d like a closer look at what my reasoning was behind each selection, you can do so by clicking on any, or all, of the following portfolio components:

Waste Management

Intel

NextEra Energy

MasterCard

Chevron

Select Medical

Ford

American Water Works

Procter & Gamble

AvalonBay Communities

Let’s look at how our portfolio of basic needs stocks fared this week.

Company Cost Basis Shares Total Value Return
Waste Management $42.60 23.24 $974.45 (1.6%)
Intel
$23.22 42.64 $934.67 (5.6%)
NextEra Energy $87.94 11.26 $925.01 (6.6%)
MasterCard $645.57 1.53 $945.86 (4.2%)
Chevron $124.95 7.93 $950.65 (4.1%)
Select Medical  $8.96 110.49 $945.79 (4.5%)
Ford $17.50 56.57 $922.09 (6.9%)
American Water Works $43.13 22.96 $942.28 (4.8%)
Procter & Gamble $81.29 12.18 $973.18 (1.7%)
AvalonBay Communities
$133.95 7.39 $907.42 (8.3%)
Cash $0.88
Dividends receivable $0
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance (3.2%)
Performance relative to S&P 500 (2.5%)

Source: Yahoo! Finance.

It wasn’t a particularly good week for this portfolio, or the market in general, so it shouldn’t be surprising to see all 10 stocks, and the S&P 500, down this week. With earnings season pretty much out of the way until next quarter, individual stories tended to dominate this week.

Analyst actions
Having arguably the worst week in the portfolio, apartment-community manager AvalonBay Communities Inc (NYSE:AVB) received an upgrade to “buy” from research firm Zacks. Specifically, Zacks cited the company’s recent earnings beat and boosted funds from operations guidance as a reason why any weakness could represent a buying opportunity. I’m not sure what short-sellers have against AvalonBay Communities Inc (NYSE:AVB) here, as vacancies are falling, and the prospect of higher lending rates is only going to drive more people to rent, resulting in even better pricing power.

Intel Corporation (NASDAQ:INTC), on the other hand, was on the short end of Robert W. Baird’s whooping stick this week. Baird downgraded both Intel Corporation (NASDAQ:INTC) and Micron Technology to “neutral” from “buy” with the expectation that semiconductor orders will be seasonally slow in the second half of the year. Baird is predicting a PC percentage unit decline in the teens and lowered Intel Corporation (NASDAQ:INTC)’s price target to $23 from $26. While it’s no secret that PC sales are sluggish, I’d like to remind investors that Intel has brought in nearly $10 billion in free cash flow over the trailing 12-month period, so there’s probably not too much cause to be alarmed.

Dividend news
Although no new dividends were announced this week, shares of oil giant Chevron Corporation (NYSE:CVX) went ex-dividend and $1 was deducted out of the share price to reflect a Sept. 10 dividend payment. With oil prices once again peeking back over $100 a barrel, it seems pretty reasonable to expect the dividend boosts to keep coming from Chevron Corporation (NYSE:CVX) on an annual basis.

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