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Does It Pay to Be Naughty or Nice?
Recently, we published a list of stocks
that relate to the 7 Deadly Sins. Since then, the performance of the stocks on that list has been mixed.The “sloth stock,” La-Z-Boy (LZB), has been the big winner so far with a gain
of more than 30% since early May. Other winners include Goldman Sachs (GS) and Disney (DIS).Gluttony and wrath, represented on the list by Morton’s Restaurant Group (MRT)
and Taser International (TASR), have not fared as well. Both are down significantly.
The other names on the list have traded flat. You can see the complete list of 7
Stocks for 7 Deadly Sins here.Looking at the performance of these seven stocks got me thinking: Does it pay to be naughty… or nice? That’s why I thought
it would be fun to compile another list — this time using the Seven Heavenly Virtues as a guide.Each of the Seven Heavenly Virtues corresponds directly to one of the Seven Deadly Sins — the idea being that practicing
virtue helps resist the temptation of vice. Perhaps by keeping an eye on the performance of the stocks on each list, we’ll have
an answer to whether or not vice outperforms virtue.Here are seven virtuous stocks that just might prove that investing in virtue can ensure positive returns…
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Virtue: Patience
Stock #1: Sherwin-Williams (SHW)Nothing represents patience like watching paint dry, and one of the top names in the paint business is Sherwin-Williams (SHW).
Not only do you need patience to watch paint dry, but you need patience to watch the housing
market recover. It’s been a long and deep recession with damage done to any business exposed to the housing sector.For homeowners, the recession has delayed many home improvement projects. But paint doesn’t last forever and is one of the cheapest
ways to spruce things up — or improve the odds of success in a sale situation.Have some patience, and buy Sherwin-Williams.
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Virtue: Humility
Stock #2: American Express (AXP)Humility is defined as giving credit where credit is due. Many banks and financial institutions lost sight of this important
credo. Instead, they gave out credit where credit was not due.Even venerable American Express (AXP)
got sucked in by greed by offering credit to those with less-than-stellar means of paying back the debt. And we all know where
greed’s got us.Now is the time to see what a little humility will do.
AXP is making the right moves starting with the pay back of $3.39 billion of TARP money. The next step for AXP is to return
to offering credit to qualified consumers. If so, the company and its fee-based cards are likely to deliver big profits for investors.I’d bet on humility over greed any day. You should, too.
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Virtue: Kindness
Stock #3: American Greetings (AM)Does kindness go out the window during a recession? If you ask the executives at American Greetings (AM),
the answer is likely to be a resounding “yes.”Consumers facing lost jobs, stagnant wages and rising expenses for things like health care and gas purchases are less likely
to exchange greeting cards in acts of kindness. Instead, those consumers are hunkered down and depressed. Such a state makes things
difficult for those in the kindness business.At the bottom of the current malaise, AM lost approximately 80% of its market value. Since then, shares have more than doubled
in value.Perhaps kindness does pay. If so, investors in AM are likely to be rewarded.
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Virtue: Chastity
Stock #4: Virgin Mobile (VM)There is not much to say here about how this company ties into our virtuous theme, except… you get the picture.
Virgin Mobile (VM) is a mobile communications device company that targets the
younger generation with pre- and post-paid mobile phone products. Virgin had the good fortune of becoming a publicly traded company
at the very start of the recession in late 2007. But it’s been downhill for them ever since.Investors have been waiting to be rewarded for chastity, and it looks like the wait might finally be over.
VM stock has rallied hard since bottoming at the end of last year. For technicians, a nice reverse head-and-shoulders pattern
is forming which suggests that the recent gains are the beginning of what may be a return to immediate post-IPO levels or beyond.
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Virtue: Temperance
Stock #5: Weight Watchers (WTW)One of the key themes coming out of the current recession is a return to virtues like temperance. Clearly there was minimal
self control as institutions and consumers ran amok. As a society, we have gotten “fat,” and now we are paying the price for that
gluttony.One company that can help us get back on the right track is Weight Watchers (WTW).
Maintaining self control is never easy, especially when it comes to dieting. WTW is that coach that can help us achieve our goals.With the Obama administration looking for ways to transform health, WTW is positioned to prosper. My hunch is that we will gain
more with temperance than we lost with gluttony.
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Virtue: Diligence
Stock #6: FedEx (FDX)When it positively, absolutely has to be there overnight, you can count on FedEx (FDX).
FedEx has risen to prominence by diligently delivering package after package and doing so on time. Over the years, its systems
approach to delivery has been far superior to the competition’s which has allowed FedEx to gain a reputation for dependability
at a fair price.Now, with economies around the globe in recession, FDX finds itself struggling a bit. But to be sure, the company’s commitment
to diligence will allow it to thrive again. With the stock trading for nearly half the price of its 52-week high, owning FDX may
very well keep vice away from your portfolio.
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Virtue: Charity
Stock #7: Wal-Mart (WMT)Wal-Mart (WMT) is one of the largest corporate donors in the world, and their
generosity is paying off during this current recession.The company has done a fantastic job gaining market share despite the cash-strapped condition of the consumer. Its low-price
strategy has been the perfect tonic for constrained budgets.Perhaps charity does ward off evil.
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