Lincoln Electric – does the name ring any bells?
Based in Cleveland, Ohio, it’s sold welding equipment and related products in Canada since 1916. More importantly, Leaside has been its Canadian head office for 85 years. A publicly traded company (NASDAQ: LECO), it’s increased its annual dividend payout for 18 consecutive years.
Two years ago this past November I recommended Lincoln Electric’s stock to readers of Investopedia.com, one of the investment websites I’ve written for in my role as freelance investment journalist.
Having lived in Leaside for over two years at that point I’d driven by its offices at 179 Wicksteed Ave. on several occasions, each time wondering what they did to make money.
I looked into their business, liked what I saw and recommended its stock. It’s up 96 percent through the end of 2013 compared to 47 percent for the S&P 500.
Lincoln Electric got me thinking about the great Peter Lynch. He managed the Fidelity Magellan Fund in the U.S. from 1977 to 1990, averaging an annual return of 29 percent over 13 years. He believed that you invest in what you know.
I’ve come to call it Everyday Investing and nowhere is that better exemplified than here in Leaside where many publicly traded companies, both Canadian and American, operate successful branch offices, retail stores and other outposts on behalf of their shareholders.
Look around – there are numerous examples of businesses you probably frequent that are publicly traded. For example, I’m a big Starbucks (NASDAQ:SBUX) fan, visiting daily between writing assignments. It’s very likely I spent at least $1,000 at its five Leaside locations in 2013.
If I’d taken an additional $1,000 at the end of 2012 and bought shares in the company, I’d have an unrealized gain of $490 at the end of 2013, lowering my actual coffee expense by 49 percent.
With that in mind I’ve created the Leaside Stock Index, a compilation of 20 companies operating in Leaside benefiting from our patronage. The entire list will be available for real-time viewing on our website (leasidelife.com) by the end of February, breaking down each stock’s individual performance as well as the index itself.
In 2013, the Leaside Stock Index achieved a total return (including currency exchange) of 45.8 percent compared to 27.0 percent for its two benchmarks, the S&P/TSX Capped Composite Index Fund (TSX:XIC.TO) and SPDR S&P 500 ETF (NYSEARCA:SPY).
Where we’re headed in 2014 is anyone’s guess but if you bet on Leaside in 2013 you were a big winner.
Here are the stocks we’ll follow:
American Stocks: Dunkin Brands (Baskin Robbins) DNKN, Berkshire Hathaway (Benjamin Moore) BRK.B, Starbucks SBUX, Remax RMAX, Best Buy BBY, Home Depot HD, Vitamin Shoppe (Vitapath) VSI, Lincoln Electric LECO, PetSmart PETM, UPS UPS.
Canadian Stocks: Loblaws L.TO, TD Bank TD.TO, Dollarama DOL.TO, Scotiabank BNS.TO, RioCan REI-UN.TO, Empire Company (Sobeys) EMP-A.TO, First Capital Realty FCR.TO, Canadian Tire CTC-A.TO, Tim Hortons THI.TO, Alimentation Couche-Tard (Mac’s) ATD-B.TO.
Leaside Stock Index
2013 Performance vs. ETF Benchmarks
[table]Stock, Total % Return 2013
Leaside Stock Index,45.8
SPDR S&P 500 ETF including currency,32.3
SPDR S&P 500 ETF excluding currency,41.6
S&P/TSX Capped Composite Index Fund,12.5[/table]