Bold take: Canadian value stocks can deliver surprisingly sweet long‑term gains, even when the market has its rough patches. If you’re curious about how to blend value, diversification, and steady upside, the Pink Lemonade portfolio is worth a closer look—and here’s why.
Recent shifts away from frozen juice concentrate have me feeling a bit nostalgic for sunny days and reconstituted lemonade, but investors can still savor the Pink Lemonade portfolio, which remains a strong performer.
What it is: a strategy that tilts toward Canadian value stocks that are gaining momentum. Over the 26 years ending January 2026, this approach posted an average annual gain of about 17.9%, beating the S&P/TSX Composite Index’s roughly 8.1% annual gain in the same span. Note that these figures come from backtests using Bloomberg data, assume reinvested dividends, and exclude fees, taxes, commissions, or other trading costs. Stocks are equally weighted and rebalanced monthly unless stated otherwise.
How it picks stocks: start with the 300 largest TSX companies by market cap. From there, it narrows to the 20 with the lowest price‑to‑earnings ratios and then selects the 10 with the strongest six‑month returns.
Expanding the lineup: curiosity deserves a test drive. The portfolio now explores extending the holdings from 10 to 20 or 30 stocks. Here’s how the expansions work:
- The 20‑stock version begins with the same 300 largest TSX stocks, then identifies the 40 with the lowest P/Es, and finally buys the 20 with the best six‑month performance.
- The 30‑stock version follows the same logic but targets the 60 lowest P/E stocks and then buys the 30 with the strongest recent returns.
Performance snapshots: the 20‑stock and 30‑stock variants delivered average annual gains of about 18.8% and 17.4%, respectively, over the same 26‑year horizon through January 2026. The broader diversification in these larger portfolios generally reduced volatility a touch compared with the original 10‑stock model.
You can visualize all three portfolios’ return histories alongside the market index in the accompanying graph.
Rough patches happen: long‑term gains are compelling, but the lemonade portfolios aren’t immune to downturns. They avoided the 43% market drop during the early 2000s tech bust, yet they lagged in several other crises over the past 25 years.
The most notable setback came during the 2008–2009 financial crisis, when the market tumbled about 43% from peak to trough. The 10‑, 20‑, and 30‑stock portfolios fell by roughly 45%, 54%, and 56% from their prior highs. Still, all three recovered faster than the market and reached new highs by 2009 or early 2010, while the index didn’t reclaim losses until 2011.
The pandemic crash of 2020 also tested the strategy; the market dropped about 22%, and the portfolios fell roughly 32%–40% from their prior highs.
Maintenance matters: the Pink Lemonade portfolio requires effort. Those who stayed disciplined and rebalanced annually—rather than monthly—still enjoyed about 14.4% annual gains over the 26 years through January 2026.
Key caveat: this approach carries risk and will face sour moments in the future. With a bit of luck, though, it can continue delivering sweet returns over the long run. And who knows—successful years in the portfolio might help you break free from winter budgets and enjoy a sunny, fresh juice moment abroad.
If you’d like to dig into the stock specifics within the Pink Lemonade portfolio and related value and dividend ideas tracked by The Globe and Mail, you can explore them here: https://www.theglobeandmail.com/investing/markets/inside-the-market/article-portfolios-for-value-and-dividend-investors-to-ponder/.
About the author: Norman Rothery, PhD, CFA, is the founder of StingyInvestor.com.
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