Canada’s version of the Magnificent 7, DOCCKS
Late last year, in early November 2024, we decided to artificially construct Canada’s version of the Magnificent 7, called ‘DOCCKS’. This is made up of six Canadian tech stocks that have appealing fundamentals, strong track records of performance, and is comprised of established companies that are recognized by many investors. The names are as follows:
D: Descartes Systems Group (DSG)
C: Constellation Software (CSU)
As a brief reminder on the construct of DOCCKS, we aim to track the DOCCKS model portfolio on a regular basis, benchmarking it against the broader TSX index. For simplicity’s sake, we are looking to begin the weightings for each name at an equal-weight (16.7%), with rebalancing on a quarterly basis.
Since Inception Performance
This is our first update on how the DOCCKS model portfolio has performed against the TSX (XIC ETF) since we began tracking it on November 8, 2024. As we can see in the performance graph below, as of the time of writing, DOCCKS (blue line) has outperformed the broader TSX (gray line) since its inception. It has been a short period of time, and so market volatility, and deviations are highly possible, but it is positive to see DOCCKS outperforming. DOCCKS has a 3.72% return since inception while the TSX has a 0.61% return.
Source: Koyfin
Looking at the how the DOCCKS names are constructed on a style basis, we can see that the majority of the model portfolio lies in the mid-cap and large-cap sections, with a tilt towards growth.
Source: Koyfin
DOCCKS has now reset to essentially an equal-weight basis across the names as it rebalances on a quarterly basis (rebalancing occurred in early January).
Source: Koyfin
Individual Stock Performance
From November until the end of the year, we saw SHOP outperform the rest of the names. Although, all names had some degree of correlation with the broader markets as they declined into year-end. Aside from SHOP, DSG, GIB.A, and KXS have been relative outperformers among the group.
SHOP rose significantly in the month of November following its solid earnings results. It saw revenue accelerate by 26%, merchant solutions revenue grew to $1.55 billion, ahead of analyst estimates, and management guided for ‘mid to high twenties’ percentage growth. The remaining names in DOCCKS all saw similar performances to each other, but in January, CSU has witnessed volatility, which we consider to represent a good long-term buying opportunity.
As we continue to track and monitor DOCCKS we expect to see periods of volatility, and potentially negative performing periods, however, the chosen six names of Canadian tech stocks have so far proved to be resilient, high-quality names. We feel that these are well-managed companies with solid fundamentals underpinning them, and we look forward to continue watching them in the coming years.
Unlock the Power of Informed Investing with 5i Research!
DIY investing doesn't have to mean going it alone. At 5i Research, we're your trusted partner in navigating the stock market. Our platform offers comprehensive stock and market research, empowering you to make smart investment decisions.
- Investor Q&A: Have burning questions? Get answers from our team of experts and fellow investors in our dedicated Q&A section.
- Research Reports: With over 60 meticulously researched Canadian stocks, our reports offer in-depth analysis, giving you the confidence to invest wisely.
- Model Portfolios, Alerts, Forums, Portfolio Tracking, and Much More...
Comments
Login to post a comment.