With this post I'm opening the books and giving you some insight into what I currently own, my thoughts about these particular stocks, and some insight into the performance to date. So, without further ado, and in no particular order, here we go...
1. Wal-Mart (NYSE: WMT) - Wal-Mart is a good stock in a sector that currently terrible. Retail stocks have been a bust over the last year, but Wal-Mart was one of the few that actually fared well. Aside from McDonald's (NYSE: MCD up nearly 6% in '08) Wal-Mart was the only Dow gainer for '08 (http://online.wsj.com/article/SB123085827075747869.html?mod=googlenews_wsj) with an 18% gain for the year. I see Wal-Mart continuing to flourish in '09 due to a continuing deterioration of the economy. Consumers will continue to seek low priced goods and Wal-Mart fits the bill better than just about any other retailer. Since purchase in early Dec. '08 I've a 6.64% gain on WMT before fees.
2. Caterpillar (NYSE: CAT) - See my Caterpillar post for insights on this stock. Since purchase in early Dec. '08 I've seen a 22% gain on CAT before fees. Not too shabby!
3. Chesapeake Energy (NYSE: CHK) - This stock was one that came recommended to me as a speculative value play and I didn't do much homework on it prior to purchase. Consequently, I bought it at $16.90/share right before some bad news came out and Cramer bagged the stock on his show and my supposed great value plummeted nearly 70%! Not to fear though, CHK is back on the upswing and recently got some good news with changes in how the SEC counts unproven natural gas reserves (http://uk.reuters.com/article/rbssEnergyNews/idUKN3028354420081230). This stock continues to have a huge upside, but it isn't for the faint of heart. Since I bought this one in early Dec. '08, I've seen it down around $9/share and up near $18/share. Currently it is at $17.20/share giving me a 6.9% gain before fees.
4. General Electric (NYSE: GE) - See my General Electric post for insight on this stock. Since purchase in early Dec. '08, I've seen a 6.92% gain on GE before fees.
5. Coca-Cola (NYSE: KO) - Coca-Cola seemed like a good stock to buy during these rough economic times since it offers a fairly recession proof product. No matter how bad things get, people can always find a buck for a soda. So far, that logic has served me alright. Since purchase in early Dec. '08, I've seen a 3.75% gain on KO before fees. Not a huge hitter yet, but still nothing to sneeze at.
6. Skyworks Solutions (NASDAQ: SWKS) - Purely a speculative play based on Cramer suggesting it as such on Mad Money. The stock was beaten down despite being the chip provider for Apple's (NYSE: AAPL) successful iPhone. After doing a little homework on the company I decided to roll the dice and shoot for a nice rebound. Since purchase in mid Dec. '08, I've seen an 18.43% gain on SWKS before fees. I still have this one pegged for at least a two bagger and maybe as much as a two and a half bagger depending on the rebound. I'm planning to sell this one as soon as I get what I want out of it.
7. Manitowoc Co. (NYSE: MTW) - See my Manitowoc Co. post for insight on this stock. Since purchase in early Dec. '08, I've seen a whopping 33.52% gain on MTW before fees!
Total portfolio: All purchase made early Dec. '08 or later. Total return to date is 12.74% before fees.
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37 comments:
What is your time frame for holding these stocks? Obviously there are tax benefits for holding longer than a year. What are your target sell prices for your picks? And because Coca-cola and Walmart are strong now, do you see them going up even further in the future or just remaining steady?
Albert, I don't really have a set time frame that I need or plan to hold any of these stocks and to be quite honest, I doubt that the market would even allow me to sell within the next year in most cases.
That said, as soon as stocks like SWKS, MTW and CHK hit my target values they'll be sold as they are my most speculative picks. I plan to add shares and hold on to stocks like GE, WMT and KO a bit longer as they are currently stocks that I like as the core of my portfolio. They have strong name recognition, huge market shares, and are brand leaders. That leaves only CAT which is one that I personally like as more of a core type stock. It also fits with the name recognition, market share and brand leader criteria, but a lot of the reasons I bought it are purely speculative so that is more of a borderline stock in my eyes.
As far as target prices that I expect to see and that I'd feel comfortable selling at, I'd put them as follows...
GE - $30
WMT - $60
KO - $55
CAT - $55
CHK - $25
MTW - $20
SWKS - $7.50
If those prices were hit and I sold exactly then, I'd see nearly a 63% return on my portfolio before fees.
Portfolio Update - The market has taken a beating over the last week or so, and my portfolio os currently down about 4.2% before fees. I still believe fundamentally in these stocks and have actually started investing more in some of them. I doubled my holding of GE when it hit about $15.80/share and it has fallen now into the sub-$14 range. I plan to buy a bit more very soon too. I'm operating under the Buffett principle of value investing. My fundamental feelings on these stocks haven't changed, despite the prices tumbling, so the best thing I can do is to invest further with the belief that they'll rebound at some point and hit the target values I've set. Will this happen? I sure hope so. Is it a guarantee? Absolutely not, but that's part of the fun.
Some updates to the portfolio have occurred since last post. First, I have increased my positions in MTW and GE due to their prices falling. I have lowered my break even point on MTW to $6.87/share and my break even on GE to $15.16/share. I'm pretty happy with both, but may double down again if their share prices stay as low as they currently are. Second, I sold my stake in SWKS when it hit $6.68/share and took a 19.51% profit after fees. Those funds were used to increase my position in GE.
I gave my portfolio a serious overhaul yesterday following huge losses in the Dow this week by liquidating all of my positions in Wal-Mart (WMT), Coca-Cola (KO), Chesapeake Energy (CHK) and Caterpillar (CAT).
Why on Earth would I sell all of my shares in stocks I believe in after a terrible week, you ask?
Well, there's a method to my madness. Looking at the current values of KO and CHK, they were within pennies of where I bought them and I'm fairly certain both will stay in that range for a while. Similarly, WMT was only a few bucks below my buy in price. Being that I had relatively small positions in each of these stocks, I wanted to consolidate my chips into fewer positions; diversification be damned!!! Now, you're probably asking, what about CAT? Well, again, I had a relatively small position in CAT, and despite being down 32% from where I bought it, I decided I liked the prospects of another one of my holdings better and would be happier seeing the money go that way.
This is where the post on trading fees becomes so important... if I had it to do over again, I wouldn't have bought such small positions in so many stocks. Instead, I would have put my chips down on one or two that I really liked. How else was I going to learn though?
Being that I made money selling my stake in SWKS last week and that three of the four stocks I sold yesterday were near my buy-in price, I've somewhat limited my losses. While they may sound brutal, I lost just under 10% (before trading fees) on liquidating these assets, and 18.3% when all fees are added into the mix.
There is some hope for me afterall though. As the market went down, GE again paid the price. I was able to reinvest all of the money that was tied up in WMT, KO, CHK and CAT back into GE at $9.37/share!!! The last time GE was under $10 was 1995. Why add more to GE over Manitowoc you might be asking? Well, because GE is currently yielding a 13.22% dividend while MTW's is under 2%, and GE had slightly more room to lower its per share cost average than MTW did. So, if the dividend on GE remains the same for this year, I can basically wipe out most of the losses incurred while liquidating SWKS, WMT, KO, CHK and CAT with just dividends from GE.
So, where do things currently stand? Well, I'm the proud owner of 100 shares of GE stock with a break even price (including fees) of $11.73/share, and 50 shares of MTW with a break even price of $6.87/share (including fees). I'll be adding to these positions again in the very near future. I'm still long on both stocks and still like GE to hit $30 or higher and MTW to hit $20 or higher after the economy starts a turn around. If those share prices were realized and the current balance of my portfolio remained the same, I'd see an 80% return on my investments before fees.
Moving forward, I'm planning to give MTW a larger share of my money, as I believe that stock has greater upside than GE (currently at 8.27% of its 52-week high vs. 24.35% from GE), as well as looking to add a stock tied to oil. I'm not sure if that will be a producer, field servicer, futures or what, but being that oil is currently so low and should rise dramatically again at some point that's where I'm now beginning to look for my next play.
Call me crazy, but I'm taking a gamble on Citigroup (NYSE: C) today. I put in a pre-market order for 100 shares of C on a day after it jumped 38%.
Why would I do such a thing? Well, the stock is still ridiculously cheap at $1.45/share on closing yesterday (although it may creep into the $1.60/share range on open when my trade initiates), and the CEO came out yesterday and stated that revenue for January and February was at $19B including writedowns versus a quarterly average of $21B in 2008. That says to me that the tide may be turning for Citigroup. Another sign this might be a good point to board the C-train is that the government has taken a stance that makes it clear that Citigroup won't be allowed to fail and that the government won't be nationalizing the bank either.
This could ultimately turn into a terrible decision, but the upside is just too tempting to pass on in my eyes. One more thing, my projected price for C in 2009 using the method discussed in my post "Recession, depression or correction?" is $11.28/share. That's 7x higher than the price I'm expecting this trade to execute at.
My order of 100 shares of C executed at $1.70/share. I'll keep you posted on how this one progresses.
It seems like you have diverged from your plans in previous updates. You had mentioned not buying smaller quantities of stocks to avoid higher percent fees (low $5 a trade ($10 total) comes in at 6% cost). You also mentioned oil related companies (XOM, FLS, SLB are current potential hits) and dividends. Seeing that financials right now are quite risky, unless you are willing to hold for a few years at least, and with almost no dividend ($0.01/share, 0.25%), why did you decide to go away from oil companies? SLB, FLS, and XOM all have dividends around 0.5%. I am still weary of the current upswing. I think we are still far from recovery, most likely seeing a gentle wave in the markets for at least the next year before it starts to rebound. Whereas before I was gung-ho to get money into the market, making purchases in December and January, I will look more to invest in solid companies with respectable dividends to try to make back the substantial loses seen even from December. I have also seen some good in putting limit orders, that way you can set a target price over the next 60 days (ING Sharebuilder at least) and buy where you would like. This will avoid the pre-market orders that could go high or low your expectation. And since I am in Japan, this is much easier than waking in the middle of the night to check prices.
I still have my eye on oil, but like the rest of the world, I've got a limited amount of cash to invest at any given time so I want to pick my battles carefully.
Ideally, I would have put $1000 or more into Citigroup when it bottomed around $1 last week, but I wanted to see a little bit of positive news before putting anything more into the market.
The reason I chose Citigroup is that nothing is going to happen with this market until the banks start moving. I feel that the banks are terribly beaten down, are undervalued, and are due for a large pop when the market starts to turn positive. That could be a couple years away or could be a few days behind us now.
As I mentioned already, the government has shown that it won;t let Citigroup fail, they have stated they are making money again, and there are other factors like M2M that could create a huge change in the valuation of this stock in the short term.
Is it a gamble? Absolutely, but I don't feel that Citigroup is going away and is probably going upward soon.
I knew a lot of bad financial advisors a few years back who had tons of Citigroup stock in their personal portfolio. They would go on and on about how great it was. This may sound spiteful, but they got what they deserve for doing a poor job with their clients.
Wonderful... and that has what to do with today?
Citigroup wasn't alone in being a screwed up bank. The entire banking system was f'ed up and the people at the top got very rich while they turned a blind eye to the state of the system.
While Citigroup in particular still isn't out of the woods, and may ultimately still remain a "bad" company, that's a separate issue from whether the bank will remain in business and whether or not the price I paid is a good price.
Value investing isn't just about picking great companies. In fact, there are plenty of great companies with stock that's not worth investing in and vice-versa.
Update:
Today, I plunked down some more cash and bought 500 shares of Lear (NYSE: LEA) for $0.7898/share. Why? Well, simple... Lear is a severely beaten down auto supplier and I saw an article in today's Detroit News that the Obama administration will be considering bailouts for auto suppliers as early as this week. If they decide to bailout these suppliers, they'll essentially eliminate the down side, making these prices a no-brainer. After purchase at around 1PM today, I saw the per share price shoot as high as $0.92/share, but closing at $0.72/share on low volume. In after hours trading, the price was back up to $0.88/share.
Citigroup (NYSE: C) has been great for me so far. In the six trading days I've held this stock, it has gone from $1.70/share to $3.20/share in after hours trading today! That's an 89% return before fees. :D After the Fed announced today that they'd be buying up more mortgage securities and keeping interest rates low, I'm expecting this one to continue to skyrocket.
Updated personal portfolio summary:
Citigroup - 100 shares @ $1.70/share
GE - 100 shares @ $11.23/share
Lear - 500 shares @ $0.7898/share
Manitowoc - 150 shares @ $4.72/share
I set a 60-day trailing stop order on both my Lear and Citigroup holdings this afternoon due to some uncertainty as to what would happen late today since today was a quadruple witching day.
http://www.investopedia.com/terms/q/quadruplewitching.asp
I wanted to make sure I locked in a good deal of profits should I see a drastic upward or downward move before closing.
The Citigroup order didn't execute, but the Lear order did. I ended up selling out all 500 shares of Lear @ $1.2552/share. After trading fees, I was able to turn my initial $394.90 investment into $601.62... a 52.3% return in less than three days!
I missed the peak on this stock ($1.63 this morning), so I actually left quite a bit of cash on the table entering my trailing stop so late into the day, but I've learned a good lesson on that for next time... set the trailing stops earlier in the day when I feel that trading might be flattening out of turning negative, if this is a stock I'm looking to unload near peak value.
The trailing stop on Citigroup executed this morning and sold all 100 shares @ $3.0818/share. I took a big percentage hit on trading fees due to the small size of this investment, but I still ended up turning a $195 initial investment including the buy and sell fees into $308.18 for a return of 57.25% in less than twelve days.
The only real lesson here is to invest bigger chunks of cash to limit the damages of trading fees, but I'm happy with this trade.
Bought 125 shares of Bank of America (NYSE: BAC) today for $7.6482/share on news that the U.S. Financial Accounting Standards Board voted to ease rules on mark-to-market accounting...
http://www.economicnews.ca/cepnews/wire/article/275612
Right now, the stock is down to $7.53/share, but I'll keep you posted on what happens with this one.
This analyst seems to think BAC is a steal, so I'm hoping he's right...
http://www.cnbc.com/id/30022465
BAC went on a 35% run today after Wells Fargo said it expected record earnings. BAC saw a high of $9.85/share, but closed at $9.55/share for this week. I'm planning to hold it for now and see what Q1 earnings look like.
In other news, MTW jumped nearly 25% for the day and GE jumped 6.5% today. All in all, a great day to be invested.
I decided to put in a $1 trailing stop for BAC just in case. Currently, it is set to sell all my shares at $10.20 should things go south when earnings are released on Monday.
Everything I've heard so far points to HUGE earnings, but we'll see how it plays out.
BAC released earnings that were roughly 9x what was expected ($0.44/share vs. $0.05/share expected), but surprisingly was down about 8% in pre-market trading. So, I decided to widen my trailing stop to $1.50 and hopefully let the day play out. I didn't want to get caught selling on a low open.
My trailing stop ended up triggering at $9.10/share. I sold out completely for a 15.83% gain after fees. While I basically left about 30% or so on the table from peak to my sell point, I can't complain too much about a gain like that in roughly 2-weeks. Next time, I'm just going to stick to my guns with the trailing stop and not worry about getting bumped out by a low opening price. Oh well, you live and learn.
I set a 5% trailing stop on Manitowoc today in anticipation for an earnings report set for tomorrow. I was anticipating brutal numbers, so I was happy that it triggered just before the end of trading today. I sold out at $5.43/share which gave me a 7.43% gain after fees. This was a stock that I wasted a lot of cash on trading fees, so I was happy to turn a decent profit on it after everything was settled.
If earnings are great tomorrow, I may be kicking myself. If they are bad, I may jump back in at a lower price later on.
After trading nine stocks since getting into the market around early December '08, I'm happy to report that I'm up 15.42% after fees. In the same time, the market fell roughly 6.25%, so I'm beating the market by nearly 22%!
As an aside, if fees were excluded, I'd be up 26.18% on these trades... not too shabby.
The only stock I'm currently holding (not included in these numbers) is GE. As of this post, I'm up 4.65% after fees on GE which is another stock I've taken a big hit on trading fees with.
I purchased 100 shares of Dow (NYSE: DOW) today for $15.8382/share.
Update 8/17/09:
Today I sold off all 100 shares of Dow at $21.09/share for a 31.01% return after fees. I also sold off all 100 shares of GE at $13.28/share for a return of 13.17% after fees. Although I hadn't previously posted this, I had purchased 55 shares of MGM at $6.33/share a couple months ago. I sold off all those shares today at $8.24/share for a return of 21.13% after fees.
That brings my YTD return to 46% after fees. :)
In return, I bought 50 shares of ProShares Short Dow 30 (NYSE: DOG) at $60.93/share in anticipation for a prolonged slide of the DJIA.
Why'd I make all these moves? Well, the MACD has flip-flopped again in the last two trading days and I saw my stocks cross below their 10-day moving averages. Both are indicators of a changing market, so I figured I'd try to take advantage of the likelihood that the market starts moving downward again.
I sold out of DOG at a loss of $2.80/share since it continued to defy the fundamentals and indicators and head downward. I think the biggest reason for this is the rampant speculation taking place in the market right now (http://money.cnn.com/2009/08/26/markets/thebuzz/index.htm?cnn=yes) and the low volume with which DOG trades. Lesson learned, avoid low volume stocks if you expect them to behave rationally.
Today I bought 50 shares of ConocoPhilips (NYSE: COP) and 100 shares of Skyworks Solutions (NASDAQ: SWKS) to test the idea of trading with MACD as my primary indicator. I chose these (along with Ford (NYSE: F), Dow Chemical (NYSE: DOW) and Alcoa Aluminum (NYSE: AA)... all which currently are saying stay out or sell according to the MACD) as my test candidates because they are companies I'm familiar with, they trade with fairly high volumes, and they tend to be pretty predictable when the MACD indicators have flipped in the past.
I'm hopeful that these do a little better than DOG did for me.
I picked up 120 shares of eTrade (NASDAQ: ETFC) today with some left over cash in my account. It had already moved 14% today and looks very bullish, so I figured I'd see what happened.
I sold out of COP for a gain of $3.52 after fees because I wanted to get back into DOW. I was able to pick up 100 shares of DOW at $22.7382/share. The MACD flipped today and this stock has been very predictable when that happens, so this will be a good test of that strategy.
SWKS is soaring today. Currently up 11.69% for the day and still climbing. I'm up over 14% after fees so far and the MACD is still bullish, so I'm staying in for now, but may put in some stop losses to protect my profits.
I'm down on ETFC, but it has been slowly inching back up the past few days. News came out yesterday that their CEO is stepping down. He isn't very popular, so this could be a good thing for the stock price.
I got out of SWKS at $13.68/share for a 15.94% profit after fees. Reason being it has kinda sputtered and traded sideways in the past few days after a huge rally. The volume has been pretty low too.
I put the money from Skyworks all into Alcoa (NYSE: AA) at $13.67/share as the MACD just flipped on it in the past couple days.
I'm out of Alcoa and eTrade for a net loss of $35.32 after fees. Not really a big deal considering there were $51.96 in fees on these two trades.
I bought in to Ford (NYSE: F) for 175 shares @ $7.41/share when I saw that the price had crossed its 10 and 50 day moving averages today and the MACD was showing strong signals that it would reverse its long term course and indicate buy today.
I set a trailing stop on Dow earlier today which just triggered and sold me out completely at $25.47/share for a profit of 10.69% after fees.
I had hoped that the trailing stop might ride out through today so I could be in on Monday which is the dividend execution date, but I set the trailing stop the same as the dividend ($0.15) for an added measure of security that I wouldn't lose any more of my profits on Dow.
As with other recent trades, the MACD appears to be reversing, we've had three consecutive negative trading days, and the stock price crossed one of the moving averages... all indicators I use to determine when to sell.
I'm currently only holding Ford which is down slightly from yesterday, but saw its MACD flip today, indicating a period of bullish activity may be forthcoming.
I just picked up 225 shares of Citigroup (NYSE: C) at $4.69/share and 125 shares of Cabela's (NYSE: CAB) at $13.4395/share based on MACDs for each.
I sold out of Ford and Citi for small losses (-$83.66 and -$50.64 respectively after fees) because I wasn't too crazy about some of the news I read today regarding the Fed's intent to sell billions in Citi shares bought during the bailout, and the talk of money being an issue again at Ford.
I'm still holding Cabela's right now and I'm up slightly after fees and I'm looking for that to continue to grow in the next few days.
I'm not sure what my next move is going to be just yet, so I've got a lot of cash sitting on the sidelines at the moment.
Since my first investment in December '08, I'm up 51.45% overall after fees.
I moved my sidelines cash into Baidu (NASDAQ: BIDU). I got 5 shares at $415.69/share today on a day where the MACD flipped. This one has been very predictable in the past with MACD changes, so hopefully that trend continues and makes me some money.
I got bounced out of Baidu today for a small loss after my $15 trailing stop triggered. I ended up losing $37.53 with fees. The reason it dropped today is due to a couple analyst downgrades which questioned Baidu's ability to turn a profit and continue to grow at such a rampant rate. I tend to agree with the analysts' statements to some degree, so I'm not particularly heartbroken.
I got out of Cabela's yesterday with a 4.42% gain after fees. I rolled that money over into 75 shares of Dow at $26.82/share.
I sold out of Dow at $28.48 for a 4.84% gain after fees, and I bought 75 shares of Kroger (NYSE: KR) at $23.13/share.
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