A Study of Favorite Stock Selections

Followers of the stock market, from gurus to novices, tend to have a special selection of stocks that they expect to do well -- and to outperform the market in general. And today, weeks after what many experts have been calling a market bottom, it seems a thought-provoking exercise to look at and follow some of the stocks being touted on industry-related websites.

It is understood that not every individual has the same investing style or time horizon, but, regardless, it should still be interesting to follow these stocks to see how well they perform over the short term and long term. And since the stocks were all mentioned at about the same time, at least the starting date for the group is quite comparable.

Two experts have their selections published in articles on the MoneyShow.com website. The remaining selections come from The Motley Fool staff based on recent recommendations by their investing community.


First, Richard Band, editor of Profitable Investing, theorizes that the stocks that suffered the greatest at the very end of the economic downturn are the ones that surge most early in a recovery. Eventually traders will take their profits in these stocks and move instead to “safer, steadier companies whose share prices haven’t climbed as far yet.” He likes large caps ExxonMobil and PepsiCo. Band's comments:

"ExxonMobil (NYSE: XOM), which has continued to drill aggressively during the industry downturn, will be set to cash in almost immediately (on) even a modest recovery in global business activity (that) will eat into inventories of oil and natural gas, putting upward pressures on prices. The financial titan of oil, sitting on $31 billion of cash (enough to pay off all the company's debt three times over), XOM is seldom a cheap stock. Since early March, though, investors have raced into dicier energy plays and left Exxon behind. It’s time for quality to catch up.

“PepsiCo (NYSE: PEP), which produces Lay’s snack foods and Quaker Oats cereals as well as soft drinks, fruit juices and bottled water, is run by one tough customer, Indra Nooyi, who ‘got going’ in early May with a 6% dividend hike. The company has now sweetened its payout 37 years in a row. …. Sill, I’m even more impressed with PEP’s generous dividend yield – currently around 3.3%.”

James Oberweis, editor of Oberweis Report, notes that Chinese stocks skyrocketed so far this year, but, even so, he believes that they will be excellent investments over the longer term. Oberweis’ top picks are two small Chinese ADRs. He opines:

“E-House (China) Holdings (NYSE: EJ) is the largest Chinese property agent, the Chinese version of Century 21. …. We see E-House as the best way to play a continued rebound in Chinese property sales volumes. The firm has a strong market position, doesn't carry inventory like developers, and has a healthy balance sheet with no debt.

“New Oriental Education (NYSE: EDU) provides foreign-language training and college test preparation courses. Education is highly prized in China, and the huge gap in wages between the educated and uneducated is leading families to invest heavily in their child’s studies.”

The Motley Fool Staff, with input from its large community of members, offered a list of stocks that they tagged "5-Star Stocks on the Upswing" for 6/8/09. They state:

“There is, however, an easy way to increase your odds of finding the stocks that will beat the market. At Motley Fool CAPS, the Fool’s investing community of more than 135,000 members, we’ve found that our ‘five-star portfolio’ is up 15.331% between January 2007 and April 2009, compared to a loss of 40.6% for the S&P 500. In order to fully capture the upside potential of those five-star stocks, it makes sense to identify them just as soon as they achieve five-star status.”

Their stocks selections, which had just the day earlier attained five-star status: Incyte Corp (Nasdaq: INCY), Ternium S. A. (ADR) (NYSE: TX), Allis-Chambers Energy, Inc. (NYSE: ALY), Columbus, McKinnon Corp (Nasdaq: CMCO), Bio-Reference Laboratories, Inc. (Nasdaq: BRLI), Nam Tai Electronics, Inc (NYSE: NTE) and Medicis Pharmaceutical Corp (NYSE: MRX).

In the future, we will look at each of these companies – and the prices used for this study will be the closing prices for each on Monday, June 8, 2009.

To read the complete articles referenced above, follow the appropriate links below.
Richard Band for MoneyShow.com, Two Picks for a Summer Pull Back
James Oberweis for MoneyShow.com, Two Ways to Ride the Dragon
The Motley Fool, 5-Star Stocks on the Upswing