11 Feb 3 Temasek-Owned Stocks to Help You Build a Money-Making Portfolio
Finding new stock ideas can be challenging.
Thankfully, in Singapore, we have Temasek, an investment company, that delivered a 25% gain for the fiscal year ended 31 March 2021.
As part of Temasek’s annual review, the firm shared its publicly-listed holdings within its S$381 billion portfolio.
The investment firm’s portfolio can provide ideas for your consideration.
The next step, of course, is to categorise the ideas into a coherent portfolio for yourself.
Here’s a simple three-step plan to build your own money making portfolio.
Building a foundation
The core of a portfolio should be made out of businesses that are dominant in their own industry with deeply-entrenched advantages.
Take Visa (NYSE: V), a stock holding within Temasek’s financial services portfolio.
The US-listed electronic payments giant owns one of the world’s largest payment networks.
For context, Visa is home to over 80 million merchant locations and 15,100 financial institutions, and has 3.8 billion cards in circulation in over 200 countries.
Needless to say, you’ll be hard pressed to find a larger network than Visa.
The business is highly profitable too.
Like a toll booth on a busy highway, the payments firm collects a small fee for each transaction that passes through its network.
For 2021, Visa processed almost 165 billion transactions worth US$10.4 trillion.
As a result, the payments firm was able to generate US$24.1 billion in revenue while earning US$12.9 billion in profits for the year.
To complement the portfolio’s core holdings, you can also consider adding a layer of faster growing companies.
Candidates for this segment include businesses typically found in growing industries that offer a runway for them to increase their revenue and profits for many years.
Airbnb (NASDAQ: ABNB), another Temasek holding, stands out as a worthy contender.
The firm operates an online marketplace that connects hosts (people who list their home or space for rent) with guests (customers who are looking for a place to stay).
Airbnb is the leader in this space, boasting 5.6 million Airbnb listings worldwide in over 100,000 cities and towns located in more than 220 countries and regions around the globe.
The platform provides a valuable source of income for 4 million hosts who earn, on average, US$9,600 per year from its platform.
More importantly, Airbnb has plenty of room to run.
According to its IPO filing, the company estimated that its total addressable market is around US$1.5 trillion, consisting of US$1.2 trillion in short-term stays, and US$239 billion in experiences.
Peering into the distant future
The final segment is reserved for more speculative bets on the future.
These businesses could be creating new technology that is gaining traction but is still nascent.
For instance, the metaverse is an early idea that is still being proven as a business.
Take Roblox (NYSE: RBLX), a company that provides tools to create immersive 3D environments where users can share experiences and collaborate with one another.
The platform has proven to be popular, attracting over 47 million daily active users (DAU) and over eight million developers from 170 countries to create new experiences for users.
More importantly, Roblox is providing an early sign that it can be profitable.
For the first nine months of 2021, the company took in US$1.35 billion in revenue and churned out a healthy US$481 million in free cash flow.
Get Smart: The final step
So there you have it, three types of stocks, all of them promising, yet presenting vastly different risk profiles.
Your role, as an investor, is to put together a portfolio that works for you, based on your risk appetite.
At The Smart All Stars Portfolio, we are strong believers that everyone should take charge of their own financial future and create portfolios that fit their own needs.
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Disclosure: Chin Hui Leong owns shares of Roblox.