Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the “One Person’s Trash Is Another Person’s Treasure” portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill, and would expect to drastically outperform the benchmark S&P 500 over the coming 12 months. If you’re interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:
Now, let’s get to the portfolio and see how it fared this week:
| Company | Cost Basis | Shares | Total Value | Return |
|---|---|---|---|---|
| Exelon | $31.25 | 31.68 | $971.94 | (1.8%) |
| QLogic (NASDAQ:QLGC) | $11.46 | 86.39 | $844.03 | (14.7%) |
| Dendreon | $5.97 | 165.82 | $661.62 | (33.2%) |
| Dell (NASDAQ:DELL) | $13.37 | 74.05 | $993.01 | 0.3% |
| Staples | $13.48 | 73.44 | $1,178.71 | 19.1% |
| Arkansas Best | $10.83 | 91.41 | $1,795.29 | 81.3% |
| Arch Coal (NYSE:ACI) | $7.03 | 140.83 | $581.63 | (41.3%) |
| Skullcandy (NASDAQ:SKUL) | $6.71 | 147.54 | $836.55 | (15.5%) |
| France Telecom | $11.64 | 85.05 | $852.20 | (13.9%) |
| Xerox (NYSE:XRX) | $8.16 | 121.32 | $1,146.47 | 15.8% |
| Cash | $0.06 | |||
| Dividends receivable | $77.55 | |||
| Total commission | ($100.00) | |||
| Original investment | $10,000.00 | |||
| S&P 500 performance | 8.5% | |||
| Performance relative to S&P 500 | (9.1%) |
Source: Yahoo! Finance.
This week’s winner
Shares of printing solutions and IT-management specialist Xerox Corporation (NYSE:XRX) took the top honors this week, advancing 6.8%, after receiving positive comments from research firm Brean Capital. Brean commented that it believes Xerox Corporation (NYSE:XRX) remains attractive based on its cash flow, and reiterated its “buy” rating and $10.50 price target on the company. I see the coming explosion in Medicaid patients – especially in California, where Xerox Corporation (NYSE:XRX) processes all Medicaid claims – due to the implementation of Obamacare as the biggest boost to Xerox Corporation (NYSE:XRX)’s bottom line moving forward.
This week’s loser
Coal miner Arch Coal Inc (NYSE:ACI) took the dubious honor of portfolio goat for a second-straight week, matching Xerox Corporation (NYSE:XRX)’s 6.8% gain with a 6.8% weekly loss of its own. The story here continues to be much of the same: coal prices and demand remain weak as renewable energies are gaining prominence, with most being now just as cost-effective as coal (if not cheaper in some cases). Arch Coal Inc (NYSE:ACI)’s case was hurt even further when metallurgical coal producer Alpha Natural Resources, Inc. (NYSE:ANR) predicted that further mine closures would be needed in the U.S. to stem oversupply and poor pricing.
