A little over a year ago (June 2011), I blogged about “Dead Money” stocks. I felt the time for a revival was coming. Some of the stocks I recommended were WMT, ABT, GE, TEVA, MRK, HPQ, INTC, CSCO, PFE, and MSFT. Here are the returns of these stocks since, then (not including dividends) as well as the S&P 500 return since June 2011:
SPY: 9%
WMT: 33%
ABT: 28%
GE: 21%
TEVA: -20%
MRK: 22%
HPQ: -52%
PFE: 20%
MSFT: 22%
CSCO: 16%
INTC: -2%
The two big losers on the list were TEVA and HPQ. I still like TEVA (and I’m still invested) but I’m not a fan of HPQ. Something I’ve come to realize over the past year is that it’s really hard to predict tech. From this list, the only tech stock I really like is MSFT, simply because it’s so stable, and so cheap. INTC really dropped the ball on mobile technology, and as a result, I’m not sure what the growth prospects for it are. MSFT is throwing the kitchen sink at its Nokia Windows 8 phone, and is determined to make it happen. My number 2 tech stock would probably be CSCO or ORCL. Because I think tech is fairly cheap as a secgtor, but have no clue which players will survive and which players are going to be left behind, I’m invested in VGT.
Wal Mart, Abbott, PFE, and GE have has such good runs since the summer of 2011, I’d venture to say that they are fairly valued, and possibly overvalued. Wal Mart at a PE of 11 or Wal Mart at a PE of 16 are two completely different investments. I’m not good enough at predicting patent cliffs, and I’m not confident in calculating a margin of safety for ABT or PFE at these levels. GE is pretty debt-laden, and high debt companies are something I’ve tried to stay away from lately. Not to mention, a PE of 18 for a conglomerate is too much. I’d look at Siemens right now, instead. Siemens, at $85, is a good deal if not a great deal.
So overall, my picks did pretty well. 7 of my picks beat the S&P 500, while 3 didn’t. I think my second year of business school, and studying valuation over the past year has been pretty valuable, and I think I’m a better investor now than I was a year ago.
From this list, I still like TEVA, MSFT, and maybe INTC, since it’s fallen back to $23. I’m currently invested in TEVA and MSFT.
dwkmusings 