This is an update through March 30, 2007 bringing the first quarter to a close. Earnings season is now upon us. It is my third follow-up report. Three months is a short time in the market for long term investors, and an eternity for a day trader. If you want to refer to the original article from December 28, 2006 see: You don't have to be 007 to find the best picks for 2007!.
Summary of Results:
- James Cramer's average return on his 9 picks was 2% after two months but now stands at: +2.82% an improvement. Adding the dividend portion (.66 x .25) of 0.165 brings Cramer's gain to 2.99%. Last month it was his speculative stocks that supported his gains. This month they pulled back and his gains came from his best pick so far, Apple Inc. (NASDAQ:AAPL)
The Indexes remained slightly negative, the DJIA leading the way south: -1.2%. Adding it's portion of the dividend yield (1.8 x .25) of .45 brings it up to a gain of 0.85 for the quarter.
My picks are down for the year, but improved from -1.9% last month, to a negative of -0.61% for the quarter. Adding the dividend portion of (3 x .25) of .75 brings my quarter to a slight gain of 0.14% which is negligible. My picks are the most volatile now with super gains over 25% from Valero Energy (NYSE:VLO) and super losses from PetroChina Co. (NYSE:PTR) which was at an all-time high when I mentioned it. Both companies are in the same industry, but PetroChina's profits are more closely regulated.
- Google (NASDAQ:GOOG) provided an +8.1% return in January, slipped to -2.9% in February and YTD has moved up for a smaller loss: -1.0% Although it has been an erratic three months Google has managed to float within a tighter range lately.
Not much change since last month. Since the quarter has concluded I added one quarter of the the dividends to the results. This is one of the criteria I used in my stock picks and will have an impact on the final results. Only 3 of Cramer's picks pay dividends averaging about .66%; the Indexes pay a higher average of 1.8%; my picks average still higher at about 3%; and Google does not pay a dividend. The flatter the market is this year the more the dividends will be a factor.
I still remain very comfortable with my stock picks and believe this year will prove to be a "Tortoise and Hare" story. It is my belief that 'Value' will beat 'Growth' and 'Indexing' over the long run. Google is a wild card! Two of my picks continue to be mentioned as buyout candidates; Dow Chemical Co. (NYSE: DOW) and Home Depot (NYSE:HD). Home Depot is receiving the most negative discussion in business circles these days but I see it as becoming a greater value at the lower price.
The following are the closing prices as of December 28, 2006 and three month returns for the seven stocks I recommended plus the addition of Spectra Energy that was spun out of Duke Energy (NYSE:DUK).
- The Dow Chemical Company (NYSE: DOW): $40.02 is UP to 45.86 (+14.6%) 3.54% yield
- Duke Energy (NYSE: DUK): $33.02 (incl. of Spectra Energry (NYSE: SE)) is UP to 33.53 (1.54%) 4.31 yield
- The Home Depot Inc. (NYSE: HD): $39.73 is Down to $36.74 (-9.24%) 2.31% yield
- Huaneng Power International ADS (NYSE: HNP): $36.00 is Down to 34.75 (-3.6%) 3.62% yield
- PetroChina ADR (NYSE: PTR): $142.12 is Down to 117.09 (-21.37%) 4.5% yield
- Time Warner Inc. (NYSE: TWX) $22.00 is Down to $19.72 (-11.56%) 1.1% yield
- Valero Energy (NYSE: VLO) $51.61 is UP to $64.69 (+25.34%) .84% yield
The following index comparisons are also from December 28, 2006 :
Dow Jones Industrial Average: 12,501.52 is Down to 12,354.35 (-1.2%)
NASDAQ Composite Index: 2,425.57 is Even to 2,421.64 (0%)
Standard & Poors 500 Index ($INX): 1,424.73 is Even to 1,420.86 (0.02%)
1) Level 3 Communications (NASDAQ:LVLT). $5.66 UP to $6.10 (+7.77%) No dividend
2) Rite Aid (NYSE:RAD)$5.49 UP to $5.77 (+5.1%) No dividend
3) Savient Pharmaceuticals (NASDAQ:SVNT) $12.01 Even to $12.02. (+0%) No dividend
The Cramer Growth Picks are:
1) New York Stock Exchange Group (NYX) $97.51 Down to $93.75 (-4%) No dividend
2) Apple Inc. (NASDAQ:AAPL) $80.87 UP to $92.91 (+14.89%) No dividend
3) Cisco Systems (NASDAQ:CSCO) $27.42 Down to $25.53 (-7.4%) No dividend
The Cramer Value Picks are:
1) Altria Group (NYSE:MO) $86.23 UP to $87.81 (1.83%) 4.12% Yield
2) Goldman Sachs Group (NYSE:GS) $200.80 UP to $206.63 (+2.9%) .72% yield
3) Halliburton Co. (NYSE:HAL) $31.26 UP to $31.74 (1.5%) .97% Yield
I have been tracking Google (NASDAQ: GOOG) since it is of broad interest as an investment, a company and as news. Google closed December 28, 2006 at $462.56 after rising initially in January it has been trading between $450 and $460 trading down for most of the quarter to end up close to where it started at $458.16 for a YTD negligable loss (-1%). No dividend
As stated, I will report the closing stock prices each month.
Disclosure: I own shares of DUK, HNP, PTR, SE, TWX, and VLO.