Thursday, August 14, 2014

Why Did I Pick These Five Stocks?

Right now it looks like my five newest picks (with 25% more behind each stock) are

  1. AGX
  2. CSCO
  3. BRCD
  4. ITRN and
  5. CBI

First let me say that making this decision is always exceedingly difficult for me.  I often waffle until I press the "buy" button and once or twice I actually changed my mind (on the same day) after that. (I switched to AGX last August over IQNT and in February I switched to KLAC at last second.

What do I like about these five names?

AGX - even though it is up 140% for me, when I did my top 200 ranking last week they were still number 6!  So I still measure them as a great deal. I like their area of expertise, building natural gas power plants to replace coal.  They are well-run, shareholder friendly (decent dividend) and I believe they are in position to increase revenues.

CSCO - as I have said many times, not a sexy stock, but a safe pair of hands. I have shown many times that a dividend of 2.6% and higher matched with a 700m market cap and in top 50 over 100m screen is a great combo. CSCO meets all those.  Then they sold off a little bit today, so entry price seems good.

BRCD - this was a late decision. They rank #50 in my top 200 list.  They are $4b in market cap and have a modest 1.5% dividend. They have $2.6 per share in cash and to me have potential to go up as a solid stock if they can grow top line even 3 or 4%.  They are still a bubble pick for me, they are the one I am most likely to bail on.

ITRN - to me this is a classic stock coming through the MFI screen.  They are Israeli, and Israeli stocks have often done very well.  I had them as #53 before their earnings this week.  And that was pre their earnings this week, which i thought were very good. They increased operating income from $10.1.m to $12.0m over last year. That is a twenty percent gain and I do not think they are getting proper credit for that. They pay a 3% dividend, nice for a 440m company.

CBI - I was shocked to see them on the list.  I have always viewed CBI as a pre-eminent construction firm.  I actually owned them a long time ago (2009 to 2010) and had a nice 60% gain.  Warren Buffett owns 10 million shares.

Regarding stocks I did not pick, I did not have the courage for NUS and HLF.  

Of those two, NUS is closest to my heart as I did so well with them a year ago.  It is possible I will still buy them.  

I thought a long time about BCOR. There was a really negative seeking alpha article about them that probably made my decision for me.  

I like BKE a lot and owned them once before very successfully. I suppose I am still gun-shy on retail. 

CA was very close to being picked.  I could still potentially slide them in.  

VIAB was also tempting as I did very well on them once before. Content does seem to be king. VIAB seems to be in a bit of a slump, I did feel they are a potential target for FOX or someone.  I thought they were one of the pricier options, that at the end probably made my decision.  

RGR is another stock I did very well on before.  I just wonder where gun sales are going.  I just could not get comfortable that gun sales had not peaked.

HRB is probably a solid CSCO-like pick.  Not sure why I booted them, they are just so-unexciting at the end I suppose.  I got burned once with JTX and I do always worry about more and more people doing taxes using online stuff.

ACN is another solid-like pick.  But I would put them behind CA (which is cheaper).

AAPL - I should have bought them 30% ago.  My not buying them now is probably psychological for not renewing back in February tranche.

As I read my reasons (and you as well), I can honestly say that these 15 picks were pretty interchangeable. I have no confidence that I have picked the 5 best from the 15 as I think all 15 that I pared down to had some positive merits.

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