An Early Review of InvestorPlace’s 2012 Picks

by InvestorPlace Staff | March 8, 2012 9:30 am

Investing is far from a one-and-done game. A good stock Monday just as easily could look like a dummy stock Tuesday, so every pick you make deserves an occasional review — even the long-term ones.

While we’re only just a couple of months into 2012, several calls made by the InvestorPlace writers have shown a great deal of motion — some good, and some bad. In the spirit of disclosure, the writers have taken another look at a few of their stock picks and options plays discussed in the early part of this year, and review where those calls stand today.

InvestorPlace Editor Jeff Reeves[1]: Expensive Stocks, SHLD

“Wonder of wonders, Apple (NASDAQ:AAPL[2]) is up 24% since this call.” Reeves was talking about his article “5 $200-Plus Stocks Worth Every Cent,”[3] in which he lauded the virtues of AAPL, Intuitive Surgical (NASDAQ:ISRG[4]), Priceline (NASDAQ:PCLN[5]), MasterCard (NYSE:MA[6]) and W.W. Grainger (NYSE:GWW[7]). PCLN and MA have recorded double-digit gains, ISRG is up 8% and GWW is up 2%, pacing the Dow. Also, his pick for our Ten Best Stocks for 2012[8] contest, Alcoa (NYSE:AA[9]), is up 11%.

On the negative side, though, a short squeeze sent Sears Holdings (NASDAQ:SHLD[10]) up 120% since his Jan. 12 article about stocks Wall Street fat cats expect to crash[11].

InvestorPlace Assistant Editor Kyle Woodley[12]:
Discover, Ralph Lauren, Joe’s Jeans

While the call was made in December[13], the clock didn’t start ticking on Discover Financial Services (NYSE:DFS[14]) until the start of this year. The basic premise? Credit card stocks as a whole have a world of growth potential[15]. And while competitors Visa (NYSE:V[16]), MasterCard and American Express (NYSE:AXP[17]) all look attractive, Discover showed a great combination of earnings growth, improved products and a bargain-basement valuation.

I projected a potential return of 50% in 2012, and at 26% gains so far, we’re halfway there. Ralph Lauren’s (NYSE:RL[18]) growth story also continued, up 13% since my late-January article[19].

A stock I thought was best to avoid because of its risky nature[20] has gained significantly in the short term. Joe’s Jeans (NASDAQ:JOEZ[21]) is up almost 50% and currently above the $1 mark it needs to continue trading on the Nasdaq.

Jim Woods[22]: Energy ETFs

“In early February, I said investors should make sure they don’t ignore the potential upside in energy funds. Well, thanks to rising oil and gasoline prices, there was renewed focus on the industry. In my article, ‘5 Energy ETFs With Potential,’[23] I said investors should look at the following ETFs: Select Sector Energy SPDR (NYSE:XLE[24]), Market Vectors Oil Services ETF (NYSE:OIH[25]), Alerian MLP ETF (NYSE:AMLP[26]), Guggenheim Solar ETF (NYSE:TAN[27]) and United States Oil Fund (NYSE:USO[28]).

“Since the article was published on Feb. 9, two of these funds — XLE (-0.15%) and AMLP (+1.12%) — were essentially flat. OIH was down 2.67%, though USO surged almost 7%. Unfortunately, the gains in the fossil fuel energy segment were more than offset by the big tumble in solar stocks, as TAN sank some 26%.

“The results here show that while there is upside in energy funds when the price of oil surges, not all energy segments are created equal — and not all turned out to have very much upside potential.”

Tyler Craig[29]: Bear VXX Calls

Perhaps my best call of 2012 has been going bearish on everyone’s favorite ‘volatility ETF,’ the iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX). In “A Bearish Play on the Volatility ETF to Start the New Year,” published Jan. 31, I contended the bullish equities market — coupled with persistent contango in the term structure of VIX futures — would spell the ETF’s day-by-day demise.

“As suspected, the VXX has sucked wind for the past two months and currently is down 30% year-to-date. The initial February bear call spread suggested reached its max profit of 80 cents per spread, and the March bear call spread[30] is well into the profit zone.

“The future continues to look bleak for the VXX. Actual market volatility remains depressed, and the VIX futures remain in steep contango (March VIX futures are trading at 20.85 with April VIX futures at 24.15). Barring some unforeseen major market correction, using short-term pops in the VXX as an opportunity to enter bearish spreads should continue to bear fruit.”

Charles Sizemore[31]: Daimler, Telefonica

“In early January, I recommended that investors aggressively buy German stocks[32], and specifically shares of luxury automaker Daimler (PINK:DDAIF[33]). My rationale was straightforward enough: ‘When you buy iconic, first-rate companies trading at prices not seen in a generation, you don’t have to get the timing exactly right. You can be a little early or a little late and still do just fine. And right now, I recommend investors use any short-term setbacks to accumulate shares of Germany’s finest multinational companies. German blue chips might be investors’ best bet for triple-digit gains over the next 12 to 24 months.’ In less than two months, Daimler is up 19%.

“Alas, they can’t all be like that. For the same basic reasons, I recommended that investors buy shares of Spanish telecom giant[34] Telefonica (NYSE:TEF[35]). While German stocks have rallied, Spanish stocks have largely stalled, and Telefonica was no exception. Telefonica is down 6% for the year and has drifted downward for most of the past month.”

Gene Marcial[36]: Dividend Stocks

“On Feb. 3, I discussed ‘3 Stocks With Big Dividend Growth Potential.’[37] Dividend stocks aren’t usually expected to show much price gains, as they are mainly attractive payout plays. But two of the stocks I recommended — Mead Johnson (NYSE:MJN[38]) and National Oilwell Varco (NYSE:NOV[39]) — have risen a respective 6% and 4% in price, which suggests that they could, indeed, meet higher forecasts for their stocks in a year. CF Industries (NYSE:CF[40]), however, is down 3.5%.

John Kmiecik[41]: LAMR Long Calls

“Here was a trade idea that was mentioned on the first trading day of 2012, and it turned out to be a nice way to start out the year. Lamar Advertising (NASDAQ:LAMR[42]) announced solid earnings back in November, and fourth-quarter revenue was supposed to rise as well. The initial trade idea was meant to be triggered over $27.65 (a recent high) when the stock was trading at $27.50. The stock just recently moved above all of its moving averages and was continually setting higher highs and higher lows, price action that defines an uptrend.

“The original price at which the Feb.  27 call was purchased was $1.90. An initial target for the underlying stock was $30, which LAMR hit on Jan. 17. The stock went above $32 in the middle of February, giving the call an intrinsic value of $5 (in addition to the minimal time value left in the option). The stock still was in an uptrend until Tuesday, when it gapped to a pivot low, making it debatable as to whether the uptrend remains in place. The shares currently are trading at $31.”

  1. Jeff Reeves:
  2. AAPL:
  3. “5 $200-Plus Stocks Worth Every Cent,”:
  4. ISRG:
  5. PCLN:
  6. MA:
  7. GWW:
  8. Ten Best Stocks for 2012:
  9. AA:
  10. SHLD:
  11. stocks Wall Street fat cats expect to crash:
  12. Kyle Woodley:
  13. the call was made in December:
  14. DFS:
  15. have a world of growth potential:
  16. V:
  17. AXP:
  18. RL:
  19. late-January article:
  20. because of its risky nature:
  21. JOEZ:
  22. Jim Woods:
  23. ‘5 Energy ETFs With Potential,’:
  24. XLE:
  25. OIH:
  26. AMLP:
  27. TAN:
  28. USO:
  29. Tyler Craig:
  30. March bear call spread:
  31. Charles Sizemore:
  32. aggressively buy German stocks:
  33. DDAIF:
  34. investors buy shares of Spanish telecom giant:
  35. TEF:
  36. Gene Marcial:
  37. ‘3 Stocks With Big Dividend Growth Potential.’:
  38. MJN:
  39. NOV:
  40. CF:
  41. John Kmiecik:
  42. LAMR:

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