Stock Watch: May Portfolio Update

[David Arney]

Alright, so it's been another month and I would like to chat a bit about the portfolio I prepared back in the middle of March.

This was two months ago, I felt pretty strongly that the market had bottomed out or was very close to bottoming out, so I started eyeing many stocks. I not only picked ones I thought would perform well, I picked stocks I thought would continue to perform poorly, and hopefully I will try to explain why some are doing well and others aren't. I hope you find it interesting. This was a fun experiment for me, and I'm glad I tested the waters to see how things have been going.

Since I first prepared the portfolio it has increased 14% in 2 months. That's a current APR of 84%, which is ungodly, but obv who knows whats going to happen in the next 10 months.

Biggest Percentage Increase: Apple (AAPL)

I purchased 100 shares at 140/share, then a month later, purchased another 100 shares at 147/share because I felt strongly that this stock was going to continue to perform. It's been as high as 200, and there was no indication why it couldn't get close to that value again. It's currently trading at 188.77/share.

Suggestion: Buy.

This stock will continue to perform well. I don't expect there to be any stock splits, as they have already split 2:1 twice in the past 7 years, but wait next year when google releases their phone software. It could brew up some competition. But I strongly recommend purchasing and holding onto this stock until at least 2009 when the exclusive rights with AT&T to the iphone has expired. At that point, AAPL shares could go through the roof with iphone purchases. We will see.

One Month Ago Google was my biggest winner after they reported huge earnings for the company. One month later, this stock has continued to stay strong, although due to some recent market fluxuations, it has not risen above 600/share, but damn is it close

Purchase Price: 462/share (& 457/share)

Currently trading at 581.45/share (up 26.5%)

Suggestion: Buy. Google is trading near an all time high right now. Although it has been just going up and up, I'm really uncertain how much higher than 600/share this stock can go, which makes me not want to buy. But I'm starting to wonder if with new software releases that will allow greater search capability for users, can this stock ever split? If so, get some. Now.

Other Strong Stocks mentioned from last time.

John Deere & Co. had also been performing really strong (up 15%) and I was please with this stock. Two days ago, though, they had reported significant losses of earnings due to rising costs in price. I was a bit shocked by this report, as I had expected with the increased price of corn and farmers scrambling to get higher yields, farm equipment purchases would be through the roof. I guess it wasn't the case. I still think this stock is a strong winner in the long run though, as they do offer high dividends along with a very safe and secure stock price.

Purchase Price: 80/share
Currently trading: 83.50/share (up 4.3%)

Suggestion: Hold

Citigroup:

I mentioned that the biggest reason I purchased this stock was because it was at a bargain price. In fact, most any bank I felt would be a great buy 2 months ago with the housing crises. Then was the time to buy, you have earned as much as you can from this stock in the short term. In the long term, though, there is still strong potential. For now, though, just hold on to what you got.

Purchase Price: 21.25
Currently: 23.41 (up 10%)

Recommendation: Hold

Other Huge Performers

Ford (F)
Purchase Price: 6.44/share
Currently Trading: 8.22/share (up 27.64%)

About a month ago Ford posted a 100 million dollar profit, which is very rare for american car companies these days. This profit came mainly from their South American and African Sales CEO Alan Mullaly has promised that Ford is on the turnaround and we should be expecting this trend to continue. I'm sorry Alan, I was very happy to have been on the profit ride with you, but the long term outlook for american car companies is grim, and although I'd love to continue holding onto this stock, you were just forced to recall 655,000 trucks yesterday, and considering your truck line is your biggest brag, things aren't looking good for you in the next 5 years. I had my fun, I'm letting this stock go.

Recommendation: Sell (take the money and run)

Buffalo Wild Wings (BWLD)

Purchase Price: 26.23/share
Currently Trading: 33.51/share (up 29.25%)

This company has contined to shine in a rough and competitive restaurant market in the US. They just reported strong sales for last quarter and things are only looking up and up! I expect the way I eat those tasty wings, there is no way this stock is going to do poorly.

Recommendation: Buy!

Sony Corporation (SNE)
Purchase Price: 41/share
Currently Trading: 50/share (Up 28%)

Sony is finally feeling the cool air after a very speculative battle with the Toshiba corporation over their HDDVD/BluRay Market push. Now that they have won over their market after learning a few tricks from the last time they tried to pull this (BETAmax) they can finally sit back and let the profit roll in. Skyrocket sales from their PS3 game systems are doing great, and there is no sign of water as this bird flies to the sky. This stock is on the up.

Recommendation: Buy

Sprint Nextel Corporation (S)
Purchase Price: 7.64
Currently Trading: 9.40 (Up 23%)

I usually put about as much faith into communication companies as I do car companies. The MCI Worldcom scandal back in 2000-2001 made me bitter about any cell phone company (I lost a lot of money on them) and I don't generally like to put my money there, but this stock has performed suprisingly well, and I'll tell you EXACTLY why: NASCAR. The auto racing franchise brings in tons of money every single year from extremely devoted followers, and who is their #1 sponsor? You guessed it. They call it the Sprint Cup for a reason. As long as that name continues to be attached to Nascar, I don't see why this stock will underperform. Also, keep an eye on their iphone market for 2009. You might see some great deals on this if you are looking to get a Spring Compatible iphone

Recommendation: Buy

Some Other Healthy Performing Stocks

American Express (up 10%)
Chevron (up 15%) Duhh....Oil Stocks!!!
JP Morgan (up 7%)
McDonalds (up 8%)
Sysco (up 5%)
WalMart (up 5%)
Time Warner Cable (up 12%) Price gouging a**holes.

Alright, and now it's time for the bad eggs. There's always a few in the basket...

Worst Performers

Delta Air Lines (DAL)
Purchase Price: 10.06
Currently Trading: 8.04 (Down 20%)

You know, I told you I was going to buy some stocks that I knew were going to suck bad. This was one of them, but I did have a ray of sunshine hope, and that was that they merged with Northwest Airlines to become the largest Airline Company in the world. I guess the bigger they come, the harder they fall. Obviously don't bother with this stock, and if you do have it, dump it before you lose any more

Recommendation: Sell

General Electric (GE)
Purchase Price: 37.25
Currently Trading: 32.32 (Down 13.23%)

This one I thought had a shot. With high energy prices, I figured for sure this stock would benefit. But I was wrong, and here's why. They have been completely affected by the housing slump. Their biggest money makers are household appliances, and since nobody is wanting to sell their homes right now, that means nobody is moving, which means nobody is going to be buying new stuff for their house, which means GE's biggest seller is not selling like it should, which means I made a mistake. I wouldn't sell this stock though. It will take some time to heal from these wounds, though

Recommendation: HOLD

Merck and Company (MRK)
Purchase Price: 45.05
Currently Trading: 39.02

What can I say, it's a bad time to buy pharmaceutical stocks. It's only going to get worse if the drug company-hatin dems get control come this november. I'm just not going to take the time to try and squeeze out a profit on this stock when the potential for loss is so much greater.

Recommendation: Sell

Starbucks (SBUX)
Purchase Price: 17.92/share
Currently Trading: 16.18/share (Down 10%)

Starbucks is having a rough time of it. They are facing increasing competition from McDonalds and other companies/chains that are now advertising gourmet coffee drinks at sub-starbucks prices. It has forced them to lower their prices as well on many of their menu items, which means a lower profit potential. They have shifted from a company working to get new customers to a an oversaturated business trying to keep the customers they have, and it has shown. Their latest earnings report was below expectations. They are about to enter the summer season, and although they aren't a strictly seasonal company like, say, smoothie king, I believe they do have some lower sales during summer months (I mean, who wants a hot coffee in the hot summer weather?). This stock is going to take a while to bounce back. No, they aren't going to go bankrupt, but no, they aren't going to double in price.

Recommendation: HOLD

Other Poorly Performing Stocks

Yahoo (Down 5%) (Too bad Microsoft Didn't buy them, otherwise it would be quite different)

Pepsico (down 4%)

Hewlett Packard (Down 3%)

Ebay (Down 4%)

Alright, that's all I got for now.

Don't work to make money. Make your money work for you.