In Part 1 of this series I discussed starting with a good story and then examining the metrics, or first starting with the metrics via a stock screen and then look at the story behind the numbers.

A third possibility is to start with an idea that springs off the pages of a business journal. Some years ago, in the 25th anniversary edition of Money Magazine they listed a group of stocks that had gone up during this tenure. The one I liked the best that withstood closer scrutiny was Southern Company (SO), the electric utility.

The story and the metrics were great. It was located in one of the most desirable growth areas of the country. There was a favorable business climate, cheap housing, cheap land, good weather and an abundance of labor. The numbers were strong as well.

In the middle of the summer with the stock market smoldering from the economic aftershocks of the BP (BP) oil spill, I decided to post a contrarian story emphasizing a very common refrain among value investors, "my pal Warren" being head of the class: buy on fear (sell on greed). This notion is continuing to work for what I called the toxic stock portfolio.

This is the third update to my ranting five months ago that six of the most reviled and most highly traded stocks featured by daily bad press as a group would outperform the overall market. It has, with the big winner rising from being one of the biggest losers.

Where did they go? Why have we not heard from them? We have heard what the rig survivors had to say, as well as the government inspectors, regulators and elected officials. BP (BP) senior management has spoken out often. We have heard from Gulf coast clean-up crews, the Coast Guard, insurance underwriters and affected business people.

Perhaps I just missed it, but I do not recall hearing anything from someone whose job it is to observe and report on safety and risk at BP facilities?

On Monday BP(BP) engineers will start a procedure know as "static kill" to permanently plug the leaking Maconda oil well in the Gulf of Mexico. This is a two-pronged procedure. Within five to seven days, mud and cement will be pumped directly into the well and via a relief well that has been dug deep in the seabed. Retired U.S. Coast Guard Admiral Thad Allen will oversee the procedure. He indicated that he would know within hours if the first phase has been successful.

BP has suffered a devastating blow to its image from the spill, which has lasted 104 days and, so far, cost billions of dollars. The market value of BP's stock has fallen by 40%. The damage is great enough for BP to consider changing its station name to Amoco. BP bought Amoco several years ago. The government response to the Gulf disaster has eroded President Obama's approval ratings.

Two weeks ago, BP plc (BP) was able to stop oil from spilling into the Gulf of Mexico. The company announced today that it was time to being scaling back on the cleanup process.

Since the spill began back in April, there has been over eleven million feet of boom deployed in the Gulf, but these only last for a certain number of tide cycles, and in areas where the company feels that beaches are not in danger, the boom will be removed.

This was another day where the real closing verdict of red or black was unknown right up until the closing bell. The day looked very mixed from index to index and sector to sector. Consumer confidence came in weak again, and there is still mixed data on housing prices.

Here were today's closing bell levels:

Dow Jones 10,537.69 +12.26 (0.12%)
S&P 500 1,113.84 -1.17 (-0.10%)
Nasdaq 2,288.25 -8.18 (-0.36%)

Nearly three months after the April 20th explosion of BP plc (BP)'s oil well in the Gulf of Mexico, it appears as though the company has finally been able to stop oil from gushing into the Gulf. But will it last?

The company is currently testing a new cap on the well, which has apparently stopped the oil flow that has been leaking into the Gulf.

Yesterday, I took a look at BP's (BP) plans to test a new cap on the oil spill in the Gulf of Mexico. Well, late yesterday, the company announced that the rather important test on the efficacy of the new cap will be delayed until today - the test was supposed to start late yesterday. The company announced that it could take at least six hours to see results, but it may take as many as 48 hours. Basically, we are in a wait-and-see mode but the Gulf Coast may not have a lot of time. If you are interested in whether or not the well is working, reports say that BP "hopes" that the well will withstand internal pressure of 8,000 to 9,000 pounds per square inch roughly six hours into the new cap experiment.

Kenneth Salazar, U.S. Interior Secretary has issued a revised ban on deep-water drilling. A federal judge had rejected the initial moratorium.

Several changes were included under the new ban, which will last until November 30. Here are some specifics of the revised ban:

Monday morning, BP (BP) announced that the costs of the Gulf of Mexico oil spill have hit $2 billion.

What's more, it is the 60th day for the Deepwater Horizon oil spill, and it sure doesn't seem like a solution is forthcoming. BP is already paying for spill containment, relief well drilling, grants to Gulf states, and the construction of sand barriers to protect coastal areas, but it will also pay claims from local businesses and potential litigation from Anadarko Petroleum (APC). For those unfamiliar with APC's part in the spill, it owns 25% interest in the Macondo well and is accusing BP of "reckless" decisions that lead to the rig explosion on April 20.

Shares of BP plc (BP) closed today's trading slightly lower, as the company's CEO, Tony Hayward, appeared before Congress today to discuss the oil blowout in the Gulf of Mexico.

BP has been under fire for the April 20th explosion that has resulted in the nation's largest environmental disaster, and today the company's CEO was in front of Congress to answer allegations that the company took cost cutting measures on the oil rig that it knew resulted in safety risks.

In the wake of the environmental disaster stemming from the BP (BP) oil spill in the Gulf of Mexico, Congress summoned oil officials to testify over the safety of their offshore drilling.

The oil spill that started back on April 20 when one of BP's offshore drilling platforms exploded continues to leak into the ocean, and could take up to another two months to stop. Following the accident, President Obama imposed a six-month moratorium on deep-water drilling and Congress is now trying to determine the likelihood of another disaster taking place.

The world learned the details about the Apple Inc. (AAPL) iPhone 4G from Steve Jobs yesterday, and while he was presenting the amazing device with 100 new features and 24% slimmer profile, the company stock was sinking. Actually, most stocks were sinking.

The biggest reason for the stocks recent demise: the big cats decided it was time -- and others started to follow. There is nothing wrong with Apple at all and yesterday Jobs pushed out further in the race to produce the best product, stretching a lead he is intent on maintaining. I'm no Apple cheerleader having posted Apple $300 -- Not This Year! last February, when I thought the fanboys were confusing dreams with facts.

Faced with the prospect of losing 40,000 jobs due to the oil-drilling moratorium, President Obama is set to reopen oil drilling. A letter by the National Ocean Industries Association states: The moratorium "will result in crippling job losses and significant economic impacts for the Gulf region."

Reopening oil drilling will come with some conditions. At present there is a liability cap of only $75 million, unless the government can show criminal negligence. Congress is meeting first about lifting the cap and then to determine what a new cap should be.

BP Plc (BP) is facing many problems as a result of the oil spill in the Gulf of Mexico -- and now we are getting an idea of the financial ramifications of the spill (or at least one research firm's estimate). According to research firm Tudor Pickering Holt, BP and other companies face a liability of $35 billion to $40 billion as a result of the ongoing oil spill in the Gulf.

Analysts from the firm compared the current spill to the costs associated with the Exxon Valdez spill and added in some timing estimates and "guess work" to come up with a potential price tag. The analysts told Fox Business, "You've got to try and put some realistic projections on oil spill liability before you can try to value any stock involved."