The end of another month and it’s time to review performance. I like to do these things for my own analytical benefit and so readers might get access to an idea or two from an article. It’s also useful because it helps identify any stocks that have slipped under the value radar but may now be attractive.
January was a pretty good month and the return on the quarter was 21%, bringing the yearly return to 105.5%. Don’t get too excited–last year was a poor January, and I’m about to anniversary some very strong numbers for February-April last year. This performance won’t continue and I know it. I won’t yap on with investment jargon but for those who know and care I’ve attached a montly returns chart at the bottom of the article.
Stock Discussion
The format is the same as usual with links to the previous articles, all of which were originally on this site. I’m covering stocks discussed in October (for a three month view), and readers should note that the S&P 500 has put on 3.8% and 5.1% since the start and end of October until now. In other words, expect the stocks to have done well but note I’m leveraged and hedged. In other words, I just want to be ahead of the index with my stock picks.
Stocks in bold are those I have bought subsequently with any current positions outlined in the disclosure at the bottom of this article. I’ll update current holdings on my blog in due course.
| Company | View+Link | Performance Since Article |
| Walgreen Company (NYSE:WAG) | Buy | 12.5% |
| Acuity Brands (NYSE:AYI) | Buy | 13.3% |
| Check Point Software (NASDAQ:CHKP) | Buy | 10.7% |
| Fortinet (NASDAQ:FTNT) | Buy | 0.3% |
| Johnson & Johnson (NYSE:JNJ) | Buy | 4.1% |
| Roper Industries (NYSE:ROP) | Buy | 8.2% |
| F5 Networks (NASDAQ:FFIV) | Buy | 28.3% |
| Acme Packet (NASDAQ:APKT) | Positive | 37.3% |
| Discover Financial Services (NYSE:DFS) | Positive | -3.6% |
| Family Dollar (NYSE:FDO) | Evaluation | -15.2% |
| Costco (NASDAQ:COST) | Evaluation | 6.2% |
| Fastenal (NASDAQ:FAST) | Evaluation | 18% |
| Mead Johnson (NYSE:MJN) | Evaluation | 16.1% |
| McCormick (NYSE:MKC) | Evaluation | 1.7% |
| V.F. Corp (NYSE:VFC) | Evaluation | -3.8% |
| Whirlpool (NYSE:WHR) | Evaluation | 18.9% |
| Pepsico (NYSE:PEP) | Caution | 4.8% |
| Intel (NASDAQ:INTC) | Caution | 1.5% |
| General Electric (NYSE:GE) | Caution | 3.6% |
| Textron (NYSE:TXT) | Caution | 13.1% |
| Yum! Brands (NYSE:YUM) | Caution | -4.6% |
I’m pleased with the turnout here. The ‘buy’ stocks averaged 11.2% and the ‘positive’ stocks did 16.9%. The latter are stocks I liked but didn’t buy at the time. The ‘evaluation’ stocks (I liked but rejected on value grounds) returned 6% and the ‘caution’ stocks averaged 3.7%.
Value in the Laggards?
A few words on the negative performers.
The main reason why Yum! Brands, Inc. (NYSE:YUM) and Family Dollar Stores, Inc. (NYSE:FDO) have fallen is because their fundamentals have changed. Yum is tying its colors to the Chinese mast and all the major informal eating out companies are seeing slowing growth there. Throw in the alleged quality control problems with its chicken in China and it’s surprising that the stock hasn’t fallen further. As for Family Dollar, all the dollar stores have seen slowing comparable sales growth this year. Perhaps it’s time they all cut back on their expansion plans? In addition, Family Dollar still has growth prospects, but I think it’s a question of calibrating them against the evaluation and risk, and it still doesn’t look cheap enough now.
