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Saturday, 25 November 2006
"Looking Back One Year" A review of stock picks from the week of July 18, 2005

 

 

 

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

One of my weekend tasks that I try to perform here on the blog, is to look at past stock selections and see if they are still worthy of consideration.  This evaluation assumes a buy and hold strategy without any sales at either declines or appreciation in price.  In practice, I advocate and practice a disciplined portfolio investment strategy that unloads stocks quickly and completely on small losses and directs me to sell small portions of my positions if and when they reach certain appreciation targets.  This strategy would certainly affect investment performance and be taken into consideration.

I like to give a simple "thumbs-up" or "thumbs-down" on these stocks simply based on latest quarter earnings report.  All that I require to give the stock a thumbs-up is that BOTH the earnings and revenue have increased.  I simply do not do an involved fundamental and/or technical analysis on these stocks that I briefly review.

On July 18, 2005, I picked Charles and Colvard (CTHR)  on Stock Picks Bob's Advice when it was trading at $27.87. CTHR had a 5:4 stock split on 1/31/06 making my effective stock pick price actually $22.30.  CTHR closed at $8.18 on 11/24/06, for a loss on my stock pick of $(14.12) or (63.3)% since posting.

On October 14, 2006, CTHR announced 3rd quarter 2006 results.  Net sales increased 7% to $12.1 million, up from $11.3 million for the same quarter in 2005.  Net income was flat at $2.2 million or $.12/share, unchanged from the $2.2 million or $.12/share reported in the same quarter the prior year.

On July 19, 2005, I posted CDW Corp (CDWC) on Stock Picks Bob's Advice when it was trading at $61.98/share.  CDWC closed at $70.09 on November 24, 2006, for a gain of $8.11 or 13.1% since posting.

 

 

On October 18, 2006, CDWC reported 3rd quarter 2006 results.  Sales came in at $1.74 billion, up 4.1% over the prior year.  Net income grew 6.3% to $77.7 million, and diluted earnings per share came in at $.98/share up 11% over the prior year results. 

Finally, on July 19, 2005, I posted FileNet (FILE) on Stock Picks Bob's Advice when it was trading at $29.97/share.  As announced on August 10, 2006, IBM acquired FileNet (FILE) for $35.00/share with a resultant appreciation of $5.03 or 16.8% over the stock pick price.  FILE is no longer traded as an independent company.

 

So how did I do with these three stocks?  Well, because of the stock implosion of CTHR, rather poorly actually.  There was one losing stock and two gainers for an average loss of (11.1)%.  You can see from this how important it is to limit losses to avoid undermining your entire portfolio.  I did not own any of these three stocks and do not currently.

Thanks so much for stopping by and visiting!  If you have any comments or questions, please feel free to email me at bobsadviceforstocks@lycos.com or simply leave your comments right on the blog.  Please also stop by and visit my Stock Picks Podcast Website.

Bob 


Posted by bobsadviceforstocks at 5:22 PM CST | Post Comment | Permalink
A Reader Writes "...thought you might be interested in this observation."

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

One of my favorite things about writing a blog about my experience with investing and some ideas that I have had about how to do this, is to receive feedback from readers who also are thinking about investing and approaches to managing their portfolios. 

The other day I received a very nice letter from Imad Y. who wrote:

"Hi Bob,

I have been reading your blog on and off for the last
year. I like your strategy. However, going through
last spring's sell off (losses), I concluded that
something still missing on reacting to market.

After few observations, I think I found the missing
link (I could be wrong but it seems to work)

As market trended down earlier this year, you started
unloading stocks that hit -8% (Many did!)

What we can add to this strategy is that if the down
trend is market related, not company performance, we
should sit on our hands until the market starts
correcting then go back buy all/ most of the stocks
that were unloaded. The reasoning behind this is that
your selection criterion is strong; therefore at a
correcting market, what is better than buying strong
stock at a bargin price!

To verify this, you can pull the charts for the stocks
that you sold in April/ May and see how they did from
July onward.

Once again I could be off track since I am first-grade
amateur trader, but thought you might be interested in
this observation.

Regards,
Imad "

First of all, thanks so much for writing and thinking about what I have been writing!   I must tell you that there is a great deal of truth in what you write.  It would be very nice to sell stocks only that were dropping due to stock-specific news.  In other words, if the stock drops due to a market condition, then maybe ignore the drop...and hopefully as the market turns back up, the stock price will be moving higher once again.

First of all, let me review my four stocks that I sold the last six months on "bad news", meaning either fundamental information or stock price performance regardless of market conditions.  And let's see if your premise is correct.  I shall draw in a red "x" to show the sale point on all of these stocks.

First, Genesco (GCO) was sold on 7/12/06 at $31.59. 


Here you can see that indeed you are correct.  Genesco did continue to drop after my sale, but then turned around and rebounded to its current level...where it closed at $38.69 on November 24, 2006.

My next sale was Toro (TTC), which I sold at $44.06 on July 13, 2006.

Here is the current chart with the red "X" again being my sale point:

 


My next sale was Barnes (B) on July 17, 2006, when I sold my shares at $17.97.

 


Again Barnes (B) dropped further after my sale, but did indeed move to a higher level, closing at $21.06 on 11/24/06.

All three of those stocks were sold because of my own technical indicators, that is they had hit sale points that I had determined.  However, my most recent sale was my own assessment of a fundamental problem with earnings results.  Healthways  (HWAY) was sold on 7/17/06 at $40.64.


Once again, you are correct.  HWAY turned lower after my sale, but then moved higher to its current level of $46.01, where it closed on 11/24/06.  This particular graph is not quite as reassuring as the others but it is noteworthy that the stock price recovered.

Before completely agreeing with you, even though each of these examples does show price recovery in each of these stocks, I believe that this is more a testimony to my stock-picking techniques than a condemnation of my portfolio management strategy.

Let me explain.  You point out correctly that stocks may decline just due to market forces and that we should thus "sit on our hands".  I suppose you would also agree that selling stocks on fundamental 'bad news' is reasonable, and I would concur with that.  

My strategy of selling stocks even if the price decline is due to the overall market stems from my belief, that if it is all possible, it would be nice to be relatively underinvested in a bear market.  If the market is starting to maul all of the stocks, why would anyone like to be in the market at all?  Yet, how can any individual actually predict the overall future market direction successfully.  I do not claim to be able to predict where the market will be even a month into the future.  

My sensitivity to the Market  comes from my experience with the CANSLIM theory as advocated by O'Neil.  For him, being out of the market in overall market corrections, and being fully-invested in strong bull-markets is an admirable goal.  By giving each new investment a short leash, so to speak, I hopefully will avoid large losses due to a market correction, or for that case, due to anything.  However, there will be times that I shall be "shaken out", especially on newer stock picks.

So while I completely agree with you on your points in general, I plan on continuing with my current strategy.  I simply cannot know when I should be breaking my "rules" without losing complete control of my disciplined trading strategy.  

Also, you will note that as I hold stocks longer and longer, I give them longer and longer leashes so-to-speak, allowing them to pull-back and advance without a sale.  That is why, as my portfolio has "matured", I find myself trading less and less and sitting on my hands more often!

I sure hope that explains my behavior.  Thank you for pointing out your observations.  They aren't wrong, they just represent a different approach to managing a portfolio.  If you do try to make this modification, why don't you email me again in a few months and let me how it is working out for you and how you deal with managing your portfolio to prevent losses in case of a major market melt-down.

If you have any other comments or questions, please feel free to email me at bobsadviceforstocks@lycos.com or simply leave them on the blog.  Also, be sure and visit my Stock Picks Podcast Website where I discuss many of the same stocks and strategies that I write about on the blog.

Bob
 


Posted by bobsadviceforstocks at 10:35 AM CST | Post Comment | Permalink
Updated: Saturday, 25 November 2006 4:27 PM CST
Wednesday, 22 November 2006
Airgas (ARG)

Hello Friends!  Thanks so much for stopping by and visiting my blog,  Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I was looking through the list of top % gainers on the NYSE and came across Airgas (ARG), which as I write is trading at $41.61, up $1.63 or 4.08% on the day.  I do not own any shares nor do I have any options on this stock.

I would like to briefly share with you my thinking as I believe this stock deserves a place on my blog!

According to the Yahoo "Profile" on Airgas, the company

"...and its subsidiaries distribute industrial, medical, and specialty gases and hardgoods primarily in the United States. Its products and services include packaged and small bulk gases, gas cylinder, and welding equipment rental, and hardgoods."

On October 25, 2006, Airgas reported 2nd quarter earnings results for the quarter ended September 30, 2006.  Net sales for the quarter grew to $790.7 million from $702.2 million in the same quarter the previous year.  Net earnings increased to $39.5 million this year vs. $29.6 million last year, or $.49/share this year, and $.38/share last year on a diluted basis.  The company exceeded analysts' expectations of $.47/share on net sales of $790 million.  In addition, the company raised guidance to $.47 to $.49/share for the third quarter, while analysts have forecast $.47/share. 

Looking longer-term at the Morningstar.com "5-Yr Restated" financials on ARG, we see a steady increase in revenue from $1.6 billion in 2002 to $2.8 billion in 2006 and $2.9 billion in the trailing twelve months (TTM).   Earnings also show steady improvement, and the company started paying a dividend of $.16/share in 2004 and has been increasing the dividend on a regular basis.  The number of shares outstanding has grown from 69 million in 2002 to 78 million in the TTM.  Free cash flow has been positive and steady and the balance sheet is adequate with $33.1 million in cash and $447.8 million in other current assets, adequate to cover the $433.2 million in current liabilities.  There is another $1.1 billion in long-term debt on the balance sheet.

Looking at the Yahoo "Key Statistics" on ARG, we see that this is a mid-cap stock with a market capitalization of $3.25 billion.  The trailing p/e isn't bad at 23.41, the forward p/e is 18.46 (fye 31-Mar-08), however the 5 yr expected growth is such that the PEG is quite high at 5.76. 

Reviewing the Fidelity.com eresearch website, we can see that Airgas (ARG) is in the "Industrial Equipment Wholesale' industrial group.  Within this group ARG is moderately priced with a Price/Sales ratio of 1.1.  Topping this group is MSC Industrial (MSM) at 2.1, and the cheapest in the group is CE Franklin (CFK) at 0.4.

Airgas actually has the lowest return on equity (ROE) of its group at 15.15.  Topping the group is DXP Enterprises (DXPE) with a ratio of 40.1%.

Finishing up with Yahoo, we can see that this company has 78.01 million shares outstanding with 70.39 million that float.  Of these, 643,520 were out short as of 10/10/06 representing .9% of the float or 1.4 trading days of volume.  The forward dividend is $.28 representing a .7% yield, and the stock last split 4/16/96 with a 2:1 split.

Airgas has a very pretty "Point & Figure" chart.  The stock has climbed from a low of $6.50 in February, 2001, and has not broken down in price since.  Currently the stock is pushing into new high territory at the $42 level.

To summarize, this has been a great stock to own the past several years.  The company's stock moved higher today on the announcement of an acquisition of Linde's bulk gas unit for $495 million.  The latest quarterly report was strong with the company beating expectations and raising guidance.  The Morningstar evaluation looked nice with steady revenue and earnings growth, and an increasing dividend.  The number of shares outstanding has been growing slowly.  Free cash flow is positive and the balance sheet appears adequate.  Valuation has been o.k. with a reasonable p/e but a PEG over 5.0.  Finally, the chart looks terrific.

This is an interesting stock to consider.  It isn't a perfect picture imho, but most of the numbers are in line and the price performance of the stock in the market has been superb!

Thanks again for stopping by!   If you have any comments or questions, please feel free to drop me a line at bobsadviceforstocks@lycos.com.  Also, please be sure to drop by and visit my Stock Picks podcast site, where I discuss many of the same stocks and topics that I write about on the blog.

Bob

 


Posted by bobsadviceforstocks at 12:29 PM CST | Post Comment | Permalink
Tuesday, 21 November 2006
Jack in The Box (JBX)

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

The longer I blog here, the more elaborate and complicated my entries are becoming.  While that may be appreciated (?), it becomes more of an intimidation every time I face my keyboard, intent on another entry.  Let me try tonight to write briefly (have I ever succeeded?), and tell you a bit about Jack in The Box (JBX), and why I think it deserves a spot on the blog.

I do not own any shares nor do I have any options on this stock.  But, having spent some of my younger years in California, I have indeed gone through the drive-in and have spoken with the "clown" to give it my order.  

JBX made the list of top % gainers today, closing at  $61.39, up $2.82 or 4.81% on the day. 

What drove the stock higher was a terrific 4th quarter 2006 earnings report.  Earnings for the quarter came in at $.92/share, up from $.59 last year.  Net earnings came in at $33.2 million, up from $21.5 million last year.  Total revenue came in at $670 million for the quarter up from $600.5 million last year.  This beat expectations for $.66/share.  The company reported solid same-store sales growth of 5.9% for the quarter.  And the company announced a 5.5 million share buy-back, also bullish for the stock.  The 'street' liked the news and the stock price climbed strongly today.

The Morningstar.com "5-Yr Restated" financials shows steady revenue growth,  earnings growth, steady shares outstanding (37 million in 2003 and 35 million in the TTM), and positive free cash which appears to be growing as well.  The balance sheet looks o.k. with plenty of current assets to cover the current liabilities, but there is the matter of $500 million in long-term liabilities on the balance sheet--doesn't appear to be a problem in light of the growing free cash flow.

Yahoo "Key Statistics" on JBX: mid-cap stock with a market capitalization of $2.17 billion, trailing p/e not bad at 22.94, forward p/e (fye 02-Oct-07) at 20.81.  A bit of a rich PEG at 2.08 (but probably will move lower in light of stellar financial results latest quarter), and Price/Sales at 0.77.  

35.42 million shares outstanding, 34.72 million that float.  As of 10/10/06 there were 1.71 million shares out short representing 3.9 trading days of volume.  No dividend paid, no stock split reported.

"Point & Figure" chart on JBX, shows a weak chart between 2001 and 2003.  The stock broke out to the upside at $23 in July, 2003, and has been moving strongly higher since, now in the low $60's near its high.

 


I like this stock!  They moved strongly higher today on a great earnings report which beat expectations.  To top it off they announced a 5.5 million share buy-back.  The company has an interesting casual Mexican Grill chain called Qdoba which it is developing, as well as a chain of convenience stores called "Quick Stuff", so it is a bit more than a hamburger chain.

The Morningstar.com report is solid, the graph looks nice, and the company is still relatively small with a market cap of about $2 billion.  For comparison McDonald's has a market cap of about $52 billion.  So there should be room for JBX to grow!

Thanks so much for stopping by!  I hope you don't mind my abridged note.  If you have any comments or questions please feel free to email me at bobsadviceforstocks@lycos.com.  Also, be sure and visit my Stock Picks Podcast Website.

Bob


Posted by bobsadviceforstocks at 8:51 PM CST | Post Comment | Permalink
Saturday, 18 November 2006
A Reader Writes "Among my own stock picks is Sonoco Products (SON).."

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website. 

I was over at a friend's house the other night for a political fund-raiser and as is often the case I found myself moving conversation towards investing.  (Is that hard to believe?) I was trying to explain my investing strategy to some acquaintances and is often the case, discussion came around to Fastenal (FAST).  This is a popular stock around here because the company is headquartered not too far from where I live, and indeed, the stock has done quite well over the years.  

I like Fastenal.  But what I like about Fastenal is not its geographic location or the fact that some locals have literally become millionaires investing in the stock.  What I tried to point out was that as an investor it is important to find stocks like Fastenal....by 'profiling' companies....I try to identify companies that have many of the same characteristics of FAST, as potential investments.  William O'Neil attempted to do the same thing with his CANSLIM approach which was also a way to identify stocks in some objective, not subjective, fashion that had the characteristics of a winning stock.  I do not use CANSLIM, but I have been affected by Mr. O'Neil's and the IBD approach.  

Anyhow, Caroline wrote:

"Bob: thanks for your excellent write-up on Best Buy. You have a lot there!

Among my own stock picks is Sonoco Products (SON on NYSE)--founded in 1899 in Hartsville, S. C., and is a leader in packaging around the globe. It's another company like Fastenal in that the average person on
the street doesn't know the name, although this same average person comes into contact with the product nearly every day.

SON produces so many of the containers and packaging that consumers pick up at the grocery store-- Folger's coffee, Minute Maid orange juice, cookies, razor blades, etc. They are busy inventing new packaging devices for keeping food products fresh all the time.

Companies like Maytag, Amana, GE buy their packaging for refrigerators, stoves, microwaves--and the
consumer tosses Sonoco's products once the appliance is installed in the home. SON owns lots of forest acerage around the south, esp. S. C.Hugh McColl was ( or may still be) on the board--H. M. was behind the banking explosion--mergers, etc.--some years ago, and was responsible for making Charlotte a banking center of the south. 

SON is NOT a glamous, go-go company making national headlines on the money shows. Slow and steady would describe the company.Just as people here know the name Fastenal, people in S. C. and the south know the name Sonoco. There is a plant in Wausau (I believe.)

It started out as the Southern Novelty Company, when they figured out how to make paper products out of pine trees. Early on they served the textile industry of North Carolina with cones, etc. for wrapping textiles on. A world lost on the south now!

More anon.

Bullish on SON, Caroline"

Caroline, thank you so much for writing.  You have obviously done some work on this stock, and I am glad that you have done well and also have some family member(s) that work at Sonoco.  I don't own any shares of this stock, but I would be happy to take a look at it and see what I can find out.

Most of your comments would fall into the Peter Lynch style of investing.  Sort of like explaining what the company does and how all of its products are around us all the time.  In addition, some investors like to follow certain people who may either be on the board or CEO's.  Some of these gifted individuals do indeed seem to make a big difference on the fortune of companies.  

However, my approach is closer to what might be called a "Quantitative Approach to Investing".  While not using any computers, I am attracted to stocks not so much by what they do, but by how they are doing. For me, a quality investment is not determined by the quality of its products (although that can be helpful in the success of a company without a doubt), but by the quality of its financial results.  For me, quality financial results is a matter of predictable consistency.  I believe that a company that has been regularly been growing its revenue, earnings, and free cash flow, is likely to continue to do so into the future.  This has also been referred to as earnings momentum.

But before completely digressing, let's take a quick look at Sonoco (SON) and Iu will let you know what I think from my perspective.

Sonoco (SON) closed at $36.75 on November 17, 2006.  It was up $.02/share or 0.05% on the day.

1.  How did they do in the latest quarter?

On October 18, 2006, SON announced third quarter 2006 results.  For the quarter ended September 24, 2006, net sales were up almost 6% to $932 million, from $881 milion in the same period last year.  Net income climbed nicely, up 33% to $61.1 million, from $45.9 million the prior year.  Diluted earnings per share were up 30% to $.60/share, from $.46/share last year.  The company also pays a dividend and paid $.24/share this quarter, up $.01 from $.23/share paid in the same quarter the prior year.  According to this report, the company beat expectations for earnings, but slightly missed on the revenue side.

2.  How about longer-term results?

Reviewing the Morningstar.com "5-Yr Restated" financials on SON, we find that revenue has been slowly increasing from $2.5 billion in 2001 to $3.5 billion in 2005 and $3.6 billion in the trailing twelve months (TTM).

Earnings have also been steadily increasing from $.96/share in 2001 to $1.61/share in 2005 and $1.77/share in the TTM.  The dividends, which were $.80/share in 2001, have been increased each and every year to $.91/share in 2005 and $.93/share in the TTM.

The number of shares outstanding has been increased slightly from 96 mnillion shares in 2003 to 99 million in 2005 and 99 million in the TTM.

Free cash flow has been positive, although not really increasing, with $219 million in 2003, dropping to $98 million in 2005, and rebounding to $191 million in the TTM.

The balance sheet is solid with $60.7 million in cash and $846.8 million in other current assets.  When combined and compared to the $632.6 million in current liabilities, we find that the current ratio works out to a reasonable 1.43. 

3.  How about some valuation numbers?

If we review the numbers from the Yahoo "Key Statistics" page on SON, we find that this is a large mid-cap stock with a market capitalization of $3.67 billion.  The trailing p/e is moderate at 19.11 with a forward p/e of 15.91.  The PEG however, suggests that based on the 5 yr estimates, the stock is relatively richly valued, as it is a 2.37.  Generally, I like PEG ratios of 1 to 1.5. 

Recently I have looked more closely at the Price/Sales ratio.  I read an excellent article by Paul Sturm last year who suggested that the importance of this ratio is relative to other stocks in the same group.  Reviewing the information from the Fidelity.com eresearch website, we find that SON is in the "Paper & Paper Products" industrial group.  Within that group, SON is reasonably priced with a Price/Sales ratio of 1.  Leading this group is Kimberly-Clark (KMB) at 1.9, Avery Dennison (AVY) at 1.2, then Sonoco (SON) at 1, International Paper (IP) at 0.7, Smurfit-Stone Container (SSCC) at 0.4, and Bowater (BOW) at 0.3.

Another valuation parameter I like to review is the Return on Equity (ROE).   I also like to compare this profitability measure with other companies in a similar business. Again, SON does fairly well with a return on equity of 15.2%.  This is exceeded by Kimberly-Clark at 24.3%, Avery Dennison at 19.1%, and followed by International Paper at 3%, and two companies with losses: Smurfit-Stone at (10.1)%, and Bowarer with a negative (30.9)%.  So by this measure, Sonoco also doesn't look too bad!

Finishing up with Yahoo, we find that there are 99.75 million shares outstanding with 96.54 million that float.  As of 10/10/06, there were 488,310 shares out short representing 1.6 days of average volume (the short ratio).  This is well below my idiosyncratic 3 day rule of significance. 

The company does pay a nice dividend of $.96/share estimated going forward, yielding 2.6%.  The last stock split was a 11:10 (or a 10% stock dividend), declared May, 13, 1998.

4. What does the chart look like?

Checking the Sonoco "Point & Figure" chart from StockCharts.com, we can see that the company which was basically moving sideways between 2001 and much of 2004, at a level around $20, broke through resistance in late 2004 and around $22 and has moved steadily higher to the $36 level now.  The stock really has shown some strength since March, 2005.  

 

5. Summary: So what do I think about Sonoco Products?

Quite frankly Caroline, this is an attractive stock.  It isn't about what the company does, although that may contribute to the financial results.  It isn't about the history, the geographic location, or who is on the board.  It is simply about the steady increase in revenue, earnings, and positive free cash flow in the face of a solid balance sheet.  In addition, the company has been keeping its number of shares stable and increasing it relatively significant dividend.  The p/e isn't bad, but the PEG is rich.  The Price/Sales and the ROE look reasonable, and the chart is encouraging.

I have to admit that this is a nice company from my perspective as well!  I don't own any shares, but if it ever is making a nice move higher on the day i have a "permission slip" to add a new position, this might well be a stock i would be adding to my portfolio!

Thanks again for writing!  If you have any other comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  If you get the chance, drop by my Stock Picks Podcast Site, where I discuss some of the same stocks and topics I wrtite about here on the blog.

Bob 


Posted by bobsadviceforstocks at 11:01 PM CST | Post Comment | Permalink
"Looking Back One Year" A review of stock picks from the week of July 11, 2005


 

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Let's take a look at the stocks I discussed during the week of July 11, 2005, and find out how they turned out!  For the sake of this evaluation, I assume an equal $ amount invested in each stock and a buy and hold strategy.  In practice, I recommend and employ an active investment strategy that involves selling poorly performing holdings quickly and completely, and selling appreciating stocks slowly and partially at targeted price appreciation levels.  This difference would certainly affect performance and should be taken into consideration.

On July 11, 2005, I posted Arrhythmia Research Technology Research (HRT) on Stock Picks Bob's Advice when it was trading at $14.55.  I have never owned any shares of this stock.  HRT closed at $21.11 on November 17, 2006, for a gain of $6.56 or 45.1% since posting.  

On November 3, 2006, Arrhythmia Research announced 3rd quarter 2006 results.  Total revenue climbed 32% to $4.41 million from $3.34 million in the same quarter last year.  Net income increased 94% to $510,000 from $263,000 and earnings per share jumped 90% to $.19/share up from $.10/share in the same quarter last year.  

On July 13, 2005, I posted Resources Connection (RECN) on Stock Picks Bob's Advice when it was trading at $29.42. I do not own any shares of this stock. RECN closed at $29.75 on November 17, 2006, for a gain of $.33 or 1.1% since posting.

On September 27, 2006, RECN reported 1st quarter fiscal 2007 results.  While total revenue did climb 10.4% to $165.1 million from $149.6 million in the same quarter last year, GAAP net income was $11 million or $.22/diluted share, down from $15.1 million or $.29/diluted share.  This quarter was adversely affected by "SFAS 123", the "accounting pronouncement requiring the recognition of compensation expense related to employee stock option grants and employee stock purchases..."  Non-GAAP net income, excluding the stock-based compensation expense worked out to $15.1 million or $.30/share.  This still wasn't anything terrific to 'write home about' and for the purpose of this blog, I stay with GAAP results, and thus, we get a 'thumbs-down' on this earnings resut.

Finally, on July 15, 2005, I posted Cintas (CTAS) on Stock Picks Bob's Advice when the stock was trading at $44.00.  Cintas closed at $43.47 on November 17, 2006.  I do not own any shares of this stock. This represents a loss of $(.53)/share or (1.2)% since posting.

On September 20, 2006, Cintas announced 1st quarter 2007 results.  Revenue increased 11% to $914.2 million from $823.5 million last year.  Net income climbed to $85 million or $.53/share, up from $78.4 million or $.46/share in the same quarter last year.  Analysts had been looking for $920.8 million in sales and earnings of $.51/share.  So the company underperformed a bit on the revenue side but then exceeded expectations on the earnings side.  A mixed bag on the expectations business but overall nice results for the quarter.

So how did I do for the week of July 11, 2005?  Well, one of the stocks had a nice gain and the other two showed very small changes; one with a small gain and the other with a small loss.  Averaging this performance gets us an average gain of 15% for the three stocks.

Thanks so much for stopping by and visiting!  If you have any comments or questions, please feel free to drop me a line at bobsadviceforstocks@lycos.com or go ahead and leave your comments right on the blog.  If you get a chance, please stop by and visit my Stock Picks Podcast site!

Have a great weekend!

Bob 

 


Posted by bobsadviceforstocks at 8:59 PM CST | Post Comment | View Comments (2) | Permalink
Friday, 17 November 2006
Hibbett Sporting Goods (HIBB) "Revisiting a Stock Pick"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

I was looking through the list of top % gainers on the NASDAQ and came across Hibbett Sporting Goods (HIBB) which closed at $32.81, up $3.19 or 10.77% on the day.  i do not own any shares of Hibbett currently, but have owned shares, and have reviewed this stock on this blog previously.  I believe it deserves another examination and I think I will show you how unique this little sporting goods company is!

I first purchased shares of HIBB on March 6, 2003.  Writing about HIBB on March 10, 2005, I pointed out I then had a cost basis of $9.74/share on my shares I owned.  (I have since sold all of my shares in Hibbett).  Considering that the stock had a 3:2 stock split on September 28, 2005, this would make my cost basis on those shares (if I still owned them) actually $6.49.  Thus, with today's price of $32.81, this would be an appreciation of $26.32 or 405.5% since I first purchased shares.  However, I sold all of my shares back on May 19, 2006, when I sold 84 shares of HIBB for $2,052.02, or at $24.43/share.  Still a nice appreciation on these shares of stock.

I first wrote up Hibbett Sporting Goods on March 10, 2005, when the stock was trading at $29.49.  Adjusted for the 3:2 stock split later that year, this works out to a pick price of $19.66.  With today's closing price of $32.81, this represents a gain of $13.15 or 66.9% since posting this stock 1 1/2 years ago!  Not as great as my 2003 purchase price, but still a very impressive performance.

Let's take a closer look at this company, and I will share with you why i believe this stock deserves a spot on my blog.

1.  What exactly does this company do?

According to the Yahoo "Profile" on Hibbett, the company

"... operates sporting goods stores in small to mid-sized markets in the Sunbelt, Mid-Atlantic, and Midwest. The company’s stores offer athletic equipment, footwear, and apparel. As of January 28, 2006, it operated 527 Hibbett Sports stores, as well as 18 smaller-format Sports Additions athletic shoe stores and 4 larger-format Sports & Co. superstores in 22 states."

2.  Was there any news to explain today's strong move higher?

Yesterday, after the close of trading, Hibbett announced 3rd quarter 2007 earnings results.  For the quarter ended October 28, 2006, net sales increased 17.2% to $129.7 million, up from $110.6 million from the prior year same period.  Net income for the quarter grew 21.5% to $9.9 million from $8.2 million in the third fiscal quarter of last year.  On a diluted share basis, this came in at $.31/share, up from $.24/share last year.  

Besides demonstrating strong results, I consider this a strong quarterly report because the company beat expectations for revenue of $125 million and earnings per share of $.28/share.   The company also raised guidance on fiscal 2007 to earnings of $1.12 to $1.16/share with same-store sales in the 3-5% range increase.  Same-store sales for this quarter rose ahealthy 7.1%.  Thus HIBB did the old "trifect-plus" imho, increasing earnings and revenue, beat expectations on both of those, and raised guidance. 

3.  Latest quarterly result?

See above.

4.  Longer-term financial results?

If we review the Morningstar.com "5-Yr Restated" financials, we can see that the company has grown its revenue from $241 million in 2003 to $440 million in 2006 and $463 million in the trailing twelve months (TTM).

Earnings have also steadily increased from $.34/share in 2002 to $.98/share in 2005 and $1.00/share in the TTM.

I like to see a stable number of shares to know that the company is not actively diluting investors' ownership of the company.  Indeed, there were 33 million shares in 2002, 34 million in 206 and 32 million shares in the trailing twelve months (TTM).

Free cash flow has been solidly positive, although down in the past two years with $26 million in 2004, $33 million in 2005, $23 million in 2006 and $14 million in the TTM.

Checking the balance sheet from Morningstar.com, we can see that the company has $5.5 million in cash and $144.4 million in other current assets.  This about can easily cover both the $54.6 million in current liabilities and the $14.7 million in long-term liabilities more than 2x over.  When calculating the current ratio,  we calculate a ratio of 2.75, which is quite healthy.

5.  What about some valuation numbers?

Examining Yahoo "Key Statistics" on HIBB, the company is reported to have a market cap of $1.05 billion, making it a mid-cap stock.  The trailing p/e is moderately rich at 32.58, with a forward p/e a bit better at 25.05 (fye 28-jan-08).  With the rapid growth in earnings anticipated to continue, the PEG (5 yr expected) works out to a nice 1.13.

According to the Fidelity.com eResearch website on HIBB,  Hibbett is in the "Sporting Goods Stores" industrial group.  At least by the measure of the Price/Sales ratio, when compared to stocks in the same group, Hibbett is relatively 'pricey' with a ratio of 2.1.  HIBB is followed by Dick's Sporting (DKS) at 1.1, Golf Galaxy (GGXY) at 1, Cablela's (CAB) at 0.8 and Big 5 Sporting Goods (BGFV) at 0.7.

Insofar as profitability, as measured by the Return on Equity (ROE), Hibbett does a little better, with a ROE of 27%, exceeded only by Big 5 at 34.6%, and followed by Dick's at 21.5%, Cablela's at 11.4% and Golf Galaxy at 10.7%.  Thus, while a bit 'pricey', the company shows strong profitability. 

Finishing up with Yahoo,  we can see that the company has 32.03 million shares outstanding with 31.90 million that float.  As of 10/10/06, there were 2.64 million shares or 8.30% of the float out short.  In light of the relatively light average volume of 318,197 shares/day, this represents the trading volume of 8.2 days (the short ratio).  Using my '3 day rule', this is a significant figure, and today's sharp rise on the back of good news, might well represent a "short squeeze" as the many short-sellers scramble to find shares to cover their already sold shares to limit their losses as the stock price climbs.  

The company doesn't currently pay a dividend, and as I noted above, the company last split its shares with a 3:2 stock split on September 28, 2005.

6.  What does the chart look like? 

If we review a "Point & Figure" chart on Hibbett, we can see a beautiful graph of ascending stock price since the company hit a low of $4.00 in July, 2001.  The company subsequently moved higher in a rather uninterrupted fashion to its recent high at $34 in March, 2006, and is currently moving once again towards its high closing at $32.81 today.


7.  Summary: What do I think about this stock?

Let's review some of the things I commented on in this entry.  First of all, the company had a very strong move higher today after terrific earnings were announced yesterday.  This might well have been a short squeeze as the number of shares out short has not been insignificant.  The company reported yesterday same-store sales for the quarter above 7%, beat expectations for both earnings and revenue and raised guidance.  This was clearly what I would call a 'trifecta-plus' earnings report!

Longer-term, the company has been cranking out revenue growth in a very consistent pattern.  Earnings have also been growing steadily.  Free cash flow is positive (although dipping the past year or so), and the balance sheet is gorgeous, with a current ratio over 2.5.  

Valuation wise, the p/e is a bit rich, but the PEG is just a tad bit over 1.0.  The Price/Sales is the tops in its group, also indicating a premium valuation, but the Return on Equity is #2 in its group suggesting once again that the extra you might need to pay for this stock may well be worth it.  There really aren't too many shares outstanding.

On a "Peter Lynch" basis,  there is something extremely attractive to me about Hibbett (even if I don't currently own any shares!).  The company is really following the Wal-Mart pattern of growth, concentrating in small towns of about 50,000 or so and starting in the south-east and spreading out across the country.  The company even likes to locate itself in malls that have Wal-marts for an anchor!  I like the idea of getting in on a successful retail firm that has a geographic potential of expanding its base throughout the country.  And that is at the same time, increasing sales through existing outlets as supported by the strong same-store sales figures.  I got shaken-out with a single poor same-store sales report.  However, the underlying story remained, and the company resumed strong sales reports.

The bottom line is that I like this stock a lot!  Now, if only I had a 'permission slip' to be buying a new position!  I just might revisit this sporting goods chain once more!

Thanks again for visiting!  If you have any comments or questions, please feel free to drop me a line at bobsadviceforstocks@lycos.com or feel free to just leave a message on the blog.  If you get a chance, come and listen to my Stock Picks Podcast where I discuss many of the stocks and strategies I write about here on the blog!

Have a great weekend everyone!

Bob 


Posted by bobsadviceforstocks at 4:32 PM CST | Post Comment | Permalink
Updated: Friday, 17 November 2006 4:37 PM CST
Thursday, 16 November 2006
What's This Blog All About?

"Hello Friends!" That's how I like to start all of my entries.  Talking to all of you who I consider my friends and confidants.  But perhaps I sometimes forget that I need to explain every once in awhile what all of these entries are about.  Why did I write up these stocks?  What is so special about them? And what is an investor supposed to do with all of these names?

Quite frankly, that really is up to you.  And I would love to hear from some of you who use these posts to assist you in your portfolios.  Have they helped?  Did you make any money?  Lose money?  Or was what I write irrelevant to your particular strategy?

For me, these names that I come across would be what I would consider "quality" stocks.  Quality can mean so many different things to so many people.  I view a quality stock as the stock of a company that is able to consistently produce good financial results.  O.K., what's "good" you ask.  What I mean is that I believe that there exist out there in the financial world certain companies which will tend to outperform the market by their consistent growth in both revenue and earnings which will be rewarded by the "market" with an increasing stock price.  These are the consistent winners.  The fast horses at a horserace.  Or the NASCAR drivers who seem to always be winning.  These are the stocks I want to own.

I go through a rather boring process of examining stocks to isolate and identify these names.  I really am an amateur so I don't claim any particular brilliance in this process.  But I try extremely hard to be open and honest about why and how I do this.  You certainly could also do the same.  There isn't very much that I do that isn't easily copied.  

So these stocks I discuss, as I have mentioned, become my "vocabulary" of investing.   I want to put together these "words" into a "language" that becomes my trading portfolio.  I am not sure which of the hundreds to actually own.  But with a portfolio management system, I want to hang on to the strongest of my holdings and to part with the weakest.

Furthermore, I want to be able to respond to the market by either adding new positions or moving into cash.  For this, I have chosen to listen to my own trading portfolio, sitting on my hands when I sell my weakest stocks on "bad news" by not re-investing the proceeds (unless I am at my minimum number of holdings), and adding a new positions when a stock of mine hits an appreciation target on the upside, at which time I sell a portion of that holding, and look to the market for another new position.  (Of course, unless I am at my maximum size of my portfolio).  

So as you read about the different stocks I talk about, I hope that you will learn to see them as I see them, as the companies among which I suspect we will find some of the top performing stocks of the entire market.  I don't expect I will identify all of the best stocks or even a majority of them.  I just want to find companies that overall will outperform a broad index of stocks.  Just do a little better than average!  I think I can do that!

If you have any questions about what I have been doing or writing about please drop me a line at bobsadviceforstocks@lycos.com.  Also, I would certainly love to hear from those of you who have found my reviews helpful, who maybe even have purchased stocks in companies I have reviewed.  Have you made profitable investments, or have you incurred losses.  Have you utilized my trading strategy?  Or have you modifed it in some undefined improvement?  Would love to hear from you!

In the meantime, have a great evening and I look forward to the start of trading tomorrow.

Bob


Posted by bobsadviceforstocks at 4:52 PM CST | Post Comment | Permalink
Updated: Thursday, 16 November 2006 4:57 PM CST
Best Buy (BBY) "Revisiting a Stock Pick"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any decisions based on information on this blog.

I was looking through the list of top % gainers on the NYSE and noticed that Best Buy (BBY), a stock that I have previously reviewed on the blog, was moving strongly higher.   In fact, BBY closed at $55.01, up $1.90 or 3.58% on the day.

I first posted Best Buy on Stock Picks Bob's Advice on March 31, 2004, more than two years ago, when it was trading at $51.65.  BBY split 3:2 on August 4, 2005, making my effective stock pick price actually only $55.01 x 2/3 = $36.67.  Thus with today's close at $55.01, this represents an appreciation of $18.34 or 50% since posting.

Let's take another look at this stock and I shall show you why I believe it still deserves a spot on this blog!

1. What exactly does this company do?

According to the Yahoo "Profile" on Best Buy, the company

"...operates as a specialty retailer of consumer electronics, home-office products, entertainment software, appliances, and related services. It operates retail stores and commercial Web sites under the brand names Best Buy, Future Shop, Magnolia Audio Video, and Geek Squad."

2. Was there any news to explain today's move higher?

Best Buy, and some of the other retail chains, are generating some buzz with the game consoles coming out tomorrow.  PS3, Sony's game platform, is expected to sell out its initial shipment in a matter of hours.  At our local store, I saw kids camping out front last night, others were camping at Target, which apparently will also be receiving its shipment of consoles.  In any case, this is the only news I could see which might be adding some interest to this stock.

3. How about the latest quarter?

On September 12, 2006, Best Buy announced 2nd quarter fiscal 2007 results. Revenue for the quarter ended August 26, 2006, increased 13% to $7.6 billion from $6.7 billion in the prior year.  Earnings per diluted share increased 27% to $.47/share from $.37/share.  Net earnings climbed to $230 million from $188 million a year earlier. The company beat expectations of earnings of $.44/share on revenue of $7.54 billion.  Same store sales during the quarter improved 3.7%.  The company maintained guidance of $2.65 to $2.80/share for the full year of fiscal 2007.

4. How about longer-term results?

Examining the Morningstar.com "5-Yr Restated" financials on BBY, we can see a nice picture of steady growth in revenue from $17.7 billion in 2002 to $30.8 billion in 2006 and $32.6 billion in the trailing twelve months (TTM). Earnings, which dropped from $1.18/share in 2002 to $.20/share in 2003, have subsequently steadily improved to $2.27/share in 2006 and $2.50/share in the trailing twelve months (TTM).

Per Morningstar, the company initiated dividends in 2004 at $.27/share.  They have grown their dividends to $.31/share in 2006 and $.32/share in the TTM. The presence of dividends is always a 'plus' to me; and a company that can steadily increase its dividend makes it that much more attractive to investors.

The company has maintained its number of shares outstanding, with 475 million shares in 2002, 489 million in 2006, dropping to 480 million in the TTM.

Free cash flow has been nicely positive with $842 million in 2004, $1.04 billion in 2006 and $1.2 billion in the TTM.

The balance sheet is solid with $2.668 billion in cash and $5.22 billion in other current assets yielding a total current assets of $7.89 billion.  When compared to the current liabilities of $6.37 billion, this yields a current ratio of a healthy 1.24. There are enough current assets to cover both the $6.37 billion in current liabilities and the $.6 billion in long-term liabilities combined.  The balance sheet appears just fine to me!

5. What about some valuation numbers?

Looking at Yahoo "Key Statistics" on BBY, we can see that this is a large cap stock with a market capitalization calculated at $26.42 billion.  The trailing p/e is a reasonable 21.96, with a forward p/e (fye 25-Feb-08) of 17.03.  With the steady growth expected for the next five years, the PEG works out to a nice 1.12.

Using the Fidelity.com eresearch website, we find that BBY is in the "Electronics Stores" industrial group.   All of the firms sell at 'reasonable' Price/Sales ratios, however, GameStop carries the highest valuation relative to Price/Sales with a ratio of 1.  Best Buy (BBY) follows at 0.8, Guitar Center (GTRC) is at 0.7, RadioShack (RSH) is at 0.5, and Circuit City is the cheapest in the group with a Price/Sales ratio of 0.3.

Insofar as profitability is concerned, examining the Return on Equity (ROE) of each of these stocks finds Best Buy most profitable by this measure with a ROE of 10.2%, followed by Guitar Center at 9.8%, Circuit City at 4.1%, GameStop at 3.3%, and Radioshack at 2.1%.

Finishing up some of the Best Buy numbers on Yahoo, we can see that there are 480.25 million shares outstanding with 401.44 million that float.  Of these, as of 10/10/06, there were 18.18 million shares out short representing 4.5% of the float or 3.7 trading days of volume.  While the 18+ million shares out short seems a lot, there are actually 5.1 million shares traded on an average day, so this short interest, or short ratio of 3.7, isn't as significant as it appears on first glance.  

As I noted above, the company pays a 'forward' annual dividend at a rate of $.40/share yielding 0.8%.  The last stock split was a 3:2 split on 8/4/05.

6. What does the chart look like?

If we examine the "Point & Figure" chart on Best Buy from StockCharts.com, we can see what appears to be a fairly strong improvement in stock price from February, 2003, when the stock was trading at $17/share to a high of $59/share in April, 2006.  The stock has pulled back recently to the $44 level, although it is now appearing to have consolidated, and is moving higher at least right now from my perspective.


7. Summary: What do I think about this stock?

Let's review some of the things I have just written.  First of all, the company is in the retail sweet spot of consumer electronics in the age of ever-improving game platforms from Sony, Nintendo, and Microsoft.  They also sell all of the game software for these platforms as well.  Latest quarter was strong with ok same store sales growth in the 3+% range.  They beat expectations on earnings and revenue but maintained guidance.

The Morningstar.com report looked nice with steady revenue growth and fairly steady earnings improvement.  The company, it should be noted, does pay a small dividend and has been increasing it each year.  In addition, the number of shares, which is large, has been held fairly constant and more recently, BBY appears to be buying back shares.  Valuation-wise, BBY looks pretty good with a p/e in the low 20's, a forward p/e in the teens, and a PEG just over 1.1.  Price/sales is ok, and the ROE is tops in its group.  

BBY has been a good retail pick for me having appreciated nicely since I posted it about 2 1/2 years ago.  I don't think teens and grown-up kids like me will ever stop being fascinated by electronic devices, software, flat-screen TV's, and digital cameras and imaging devices.  Now with Best Buy looking to expand into China, this may well be another frontier for this company to expand its retail presence.  I still like Best Buy, and as my kids will tell you, I am an inveterate shopper there!  

Thanks so much for stopping by and visiting here!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.  Also, be sure and visit my Stock Picks Podcast Site where you can listen to me discuss many of the same stocks and topics I write about here.

Bob 

 


Posted by bobsadviceforstocks at 4:08 PM CST | Post Comment | Permalink
Wednesday, 15 November 2006
A Reader Writes "How much money do you put in each stock?"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

One of my favorite things about blogging about stocks is the chance to hear from people who have been reading what I write and have questions of their own. If you have any comments or questions and wouldn't mind me blogging them, please drop me a line at bobsadviceforstocks@lycos.com.  I read all of my email and try to answer as many letters and comments as possible.

Yesterday I received a nice letter from Sunil V. who wrote:

"Hi Bob,

 
I really liked reading your blogs on tripod. Curious about how it began I started reading from May 2003! I am just beginning and having some saved money wanted to get started in investing. I really liked the strategy you use in buying and selling the stocks. I also plan to have a discipline and a good strategy as i build my portfolio.
 
I had a very basic question. How much money do you put in each stock? I mean if i have a plan of 25 stock over a period of time, what should be the starting amount for each stock. If you have any benchmark you use please let me know. My idea as of today is $1000 per stock and increase this as i gain more knowledge in investing.
 
I have a link to your blog, so it would be ok if you give a reply on the blog or give me a seperate mail.
 
Thanks in advance for your reply and keep writing.
Sunil."
 
Sunil, thank you for writing to me! I am grateful for your loyalty reading the blog since May, 2003!  I hope that what I have written has been helpful to you in understanding the market, at least from my particular perspective.  Please be sure to read about investing from as many different writers and bloggers as possible.  I have links to many terrific blogs on the main page along the left column.
 
To get back to your question, how much money I put into each investment--currently I have been adding about $5,000 for each position.  My last purchase, Precision Castparts was actually about an $8,000 purchase.  I have not been totally consistent with my purchases, but would like to see about a $5,000 position in each holding.
 
You mentioned about 25 positions...something that is my goal as well.  Currently I have only 11 positions, far from the maximum.  As you know, I let the trading activity of my existing holdings in my portfolio determine whether I shall be adding a new position or not.  I have advocated starting at 1/2 of the maximum number, but you don't have to do that all at once.  
 
For instance, let's presume you are starting from "scratch".  Perhaps you can afford to add $300 to your account each month.  I would wait until you hit $2,500 to add my first position.  I would then wait until I had another $2,500 saved up to add a second position.  I would continue adding positions until I hit my "neutral" position.  That is, if you are aiming for 25 holdings, I would continue this process until I got to 12.  This could indeed take several years or more to accomplish.  But there is no rush in all of this.  Successful investing is about a patient, methodical approach to building and managing your portfolio.
 
I would manage those first holdings as I manage all of my stocks.  If the stock dropped 8% I would sell the holding.  But instead of sitting on my hands, since I hadn't got to "neutral", I would replace that stock as long as I had $2,500 in cash including my sale.  I would also start selling 1/6th of my holdings as they hit appreciation targets as I have detailed elsewhere.  But I would not automatically add a new position, unless I had the $2,500 available for my minimum buy.  
 
As soon as you got to 12 positions, I would continue the monthly addition of $300 or whatever amount you could afford.  Then I would implement the portfolio management strategy of buying new positions only when selling on good news and then sitting on my hands, so to speak, whenever I sold on bad news....which would be a sale either on fundamental negative news, or on a decrease in the stock price so that it hit a sale point.
 
Of course, I have my "minimum" portfolio size, which I would suggest to be 1/2 of the number of the "neutral" position.  Thus, if 12 was "neutral", then 6 would be the minimum number of stocks in my portfolio.  Whenever a stock was sold when I was at the minimum, I would replace that stock and not let the number drop below 6.  I would suggest adding a new stock whenever any of the six holdings hit a sale at an appreciation target.
 
After reaching 25 (or whatever maximum you had planned), I would not add any new positions, and instead would direct new contributions and partial sales into a cash portion of the portfolio.  Then if the portfolio dropped to 24, and then I got a "buy" signal, I would try to start increasing the size of the positions, by investing a larger amount.
 
Does this answer your question?  I hope so.  There aren't any right answers to your questions.  The size of your positions will depend on the amount of money you have available.  I would suggest going slower building your portfolio rather than use smaller positions and building your portfolio quicker!
 
Good-luck and thanks again for being a loyal reader!  I look forward to your comments in the future!
 
Bob 


Posted by bobsadviceforstocks at 9:50 PM CST | Post Comment | Permalink

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