Eight for 2008:
Still on the short list:

Stocks that did not make the cut:

• Lockheed Martin (NYSE: LMT) has a low P/S but a high price to book of 6, which I will have to explore. However, if you need a satellite or a fighter, who are you going to call? This is a very profitable company on a lot of peoples list of quality stocks. However, it seems that all the good news is priced into the stock. It has an average P/E and I have a hard time swallowing the price to book. I also think world wide, government spending is going to favor helicopters more than fighters going forward. I really have nothing bad to say about Lockheed, it's just not a standout and I think that Raytheon will have better prospects. Perhaps I would feel different if I anticipated greater spending on space exploration but that too has been cut over the years.
• BHP Billiton Limited (ADR) (NYSE: BHP) made an unsolicited offer to buy Rio Tinto plc (ADR) (NYSE: RTP) earlier in the week, and is looking to grow more dominant in mining and raw materials. What it is thinking about the global opportunity is the same reason I have included it on my shopping list. I think the M&A story makes me want to put this one on hold. There are too many ways this could be played out and too much is happening behind the scenes for me to consider it as a value play at this time.
• Chesapeake Energy Corporation (NYSE: CHK) is a big player in the North American gas exploration and production market. It is floating about halfway between its 52-week high and low. Gas prices are significantly down from the highs of a couple of years ago. Another mild winter seems to be shaping up, but any chilling in the temperature or increases in demand from electric utilities could send this stock back to its highs and beyond. From where I sit the mild winter is here, oil prices will soften, demand will level off for a while and there does not seem to be any shortages of natural gas. The stock had a great run in 2007. I do not know if it is sustainable. Most of its metrics say it is still a value but I favor the predictability of the utilities next year over the explorers.

Somewhere along the journey I am sure to gather some "egg on my face" but for now we boldly go forward and with the addition of two stocks and the deletion of three we stand at 15 possibilities. The process will continue with further updates throughout the shopping season until there are only eight for 2008. I view all 15 of these companies worthy of consideration, so I expect it will come down to the greatest value on the given day... as it should.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

DISCLOSURE: I currently own shares of BRK.A, ISRG, HNP, DOW, DUK, VLO, GD, APC, and AAUK.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.