New buy is an initial flop

LSI chart May 2015May saw the Leaside Stock Index deliver less than stellar performances from both its Canadian and American stocks, leaving very little momentum entering the slower summer months.

The cause wasn’t helped by the newly purchased Whole Foods stock, which lost 4.54 percent in just half a month’s trading. It was purchased at $43.20 on May 15. Its move into smaller stores and lower prices will hopefully do the trick as we move through the second half of 2015.

Excluding currency the LSI gained just 0.20 percent in May with its 10 Canadian stocks losing 0.15 percent while its American stocks saw a 0.53 percent increase. Including currency the LSI gained 2.13 percent on the month with its American stocks up 3.94 percent due to the appreciating U.S. dollar.

Meanwhile, its two benchmarks — SPDR S&P 500 ETF and iShares Core S&P/TSX Capped Composite Index Fund — delivered similar results to the LSI, up 0.12 percent without currency and 2.25 percent including the exchange. Forgetting about currencies, the SPDR S&P 500 ETF gained 1.29 percent in May, almost 2.5 percentage points higher than the iShares Core S&P /TSX Capped Composite Index Fund.

Year-to-date the LSI is up 0.90 percent excluding currency and up 4.70 percent taking currency into consideration. The benchmarks are up 6.95 percent including currency and 2.72 percent without the exchange, almost two full percentage points higher.

If the LSI is to beat the benchmarks in 2015, as it easily did in 2014, some of the 20 stocks are going to have to go on a tear.

So, which stocks did deliver the goods in May?

Well, on the American side of the ledger both Starbucks and Home Depot had good performances delivering gains of 5.14 percent and 3.60 percent respectively. While Dunkin Brands’ didn’t do quite as well, up 1.88 percent in May, year-to-date it’s up 24.48 percent, a close second to Starbucks for top performer.

Here in Canada the LSI saw monthly gains of 2 percent or more from three stocks: Loblaws, Empire Company (Sobey’s) and Alimentation Couche-Tard (Mac’s). Each of the stocks on the back of their performances in May are now back in positive territory or close to it as is the case for Alimentation Couche-Tard.

Particularly disappointing were the 6.0 percent and 7.23 percent declines in the stock prices of both RioCan and First Capital Realty. Long term these holdings should pay big dividends but for now they are really weighing down the LSI as is Vitamin Shoppe (Vitapath) on the U.S. side of the ledger, down 5.21 percent in May and 18.28 percent year-to-date. Vitamin Shoppe is easily the worst performer of all our 20 stocks in 2015.

The LSI’s May performance suggests there will be very little in terms of fireworks over the next few months. I wouldn’t expect much movement up or down in June, July and August. Like many in Leaside, the index will probably take an extended vacation over the summer. Come September it will hopefully be ready to get into gear.