Saturday, August 09, 2014

Which Stocks Should I Choose?

Which Stocks Should I Choose (aka The Lady & The Tiger)?

The final week of my August 15th, 2013 tranche is here.  I am sure my readers are bored of my discussions, but it helps me as an investor to lay out my bull cases here. I believe I am down to 15 stocks, and am leaning towards 5 specific stocks.

  1. NSR
  2. COH
  3. AVG
  4. HRB
  5. TIME
  6. NUS
  7. CA
  8. CTCM
  9. HLF
  10. HSII
  11. AGX
  12. CSCO
  13. ITRN
  14. VIAB
  15. RGR
My bias, given some of my recent studies, is towards dividend stocks and towards larger cap stocks (say over $700 million). However, those are guidelines for me, not rules.

NSR - I already own these guys in my May tranche. They do not pay a dividend.  They are down about 50% from their 52 week high, due to uncertainty regarding a govt contract. If they retained the contract as is, then they are a potential double. There are rumors they are not the front runner.  My view is that I have enough risk with a single holding.

COH - I went to the expert here, my wife. I asked her view on Coach products and she told me that they are not the "in" product any more.  So while COH is down about 40%, pays a 3.9% dividend and is a larger cap stock, I am taking a pass due to my wife's view.

AVG - in so many ways, this stock is so cheap. They do not pay a dividend and are just short of a $1b market cap.  I already own them in my November and February tranches, so I will pass.  I do like them though at current price.

HRB - I wish I had bought them between March and August of 2012 when they were a regular on the list.  That would have been between a 70 and 100% gain in a year. While they are in no way as cheap any more, they are a safe pair of hands with a 2.4% dividend + a large cap. I cannot dismiss them.

TIME - I have bought for my dividend portfolio, though ironically they are yet to announce a dividend.  They reported earnings last week, and I felt they were just ok. I am not convinced they should be on the list, so I will not buy them this "time". (sorry, it was too easy).

NUS - one of my greatest stock picks ever. They were in my Feb 2012 portfolio and returned 181% in under a year. I still can't believe that number.  Do they have it in them a second time?  They are certainly out of favor.  With issues in China in the Winter (is coming), it seems they have lost momentum.  I am not sure - at some point I suspect they will have hit bottom.  I will watch them closely, at under $50 they might be a great pick.

CA - well, I liked CA at $29.54 in May. They are now 28.55, so i suppose I should like them more.  It seems all of these computer consulting firms (CA, IBM, ACN, GIB etc) are all struggling a bit. With a 3.5% dividend yield and a relatively low price, I think they have to make the next round.  So far NUS, HRB & CA move forward.

CTCM - the Russian TV network.  Pretty cheap by many metrics, but I am tired of Putin and will vote with my stock picks: Nyet!

HLF - This is a Jekyll & Hyde stock. Somedays I think I should buy it, other days I think I should short it. If you go to their financials and what analysts are saying, they trade for just 7x next years earnings. Cheap for a company that is growing.  You do have the specter of the SEC or some govt agency stepping in; but you do have Carl Icahn holding a large position next to you, and he is nobody's fool. If the SEC finds nothing wrong, this stock pops from under $50 to $70 to $75 I think.  I think i have to carry HLF to next round.

HSII - While they are on the expensive side of stocks I am considering, I do believe that if unemployment drops in next 12 months (globally), this is a stock that could really go up. They are a $19 stock, but in the go-go economic days of 2007, they were between $35 and $40.  They also have a decent dividend.  I think they stay on list.  So far NUS, HRB, HLF, HSII & CA move forward.

AGX - A bit of a smaller cap name that generally pays a special dividend.  They are coming of age for me in August, but I could roll over for another year. I am tempted as they still seem very very cheap to me.

CSCO - I know (yawn), pretty boring. But there is nothing wrong with a company that makes a ton of dough and is cheap. They actually seem to be beating some of their more nimble competitors (the elephant sometimes wins). They have a 3% dividend and a fortress balance sheet. MSFT and INTC have really moved up, it may be CSCO's turn next.

ITRN - this just came on the list this week, though I had them #72 last week in my top 200. Smaller Israeli company. They pay a 3% dividend. They actually report earnings on Monday, so if they are strong, they may run away from me. If they are so-so I may not be interested anymore. I guess this is a "stay tuned" story, but if they pop on Monday, you heard about them here first.

VIAB - a bit pricey, but I owned in Nov 2012 tranche with solid success (up 67%).  They are shareholder friendly, large, with a 1.8% dividend. Content seems to be valuable, always possible they get put into play.

RGR - gun manufacturer, has dropped a lot of late. Pays a solid dividend.  I do wonder if there comes the point where everyone who wants a gun has a gun (or two or three).  So have some of the robust sales from a year or two ago stolen sales from tomorrow?  Not sure, but will considre.

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