The post-Enron malaise literally imploded a portion of my portfolio. It appears I was a day early and a dollar over as opposed to a day late and a dollar short. To my credit, I actually called this correction in my January 2002 newsletter, Kenneth Coleman's Investment Tracker, but the rules of Pro Picks don't allow selling short.
The stocks I am replacing should have been sold when they hit a 15% loss. My excuse for leaving them in too long was my vacation and a non-working lap top computer (hit with a virus). To view the Pro Picks portfolio on AAII.com, the area is open to everyone thru the end of this round, so you no longer need a password until the end of April. You may pass this info on to anyone who is interested.
Editor's Note: The following is the rationale as to why these companies are included in my portfolio. Thanks to the American Association of Individual Investors (AAII) and The Motley Fool for providing the source of information used to describe these stocks.
RPM's main product is coatings to waterproof structures. It also specializes in select chemicals. C.C. Chambers researched this company last November. I didn't go for it then because of its 149% debt margin. It had strong earnings per share growth the past two quarters-a 41% growth rate last quarter and 29% in the prior quarter. EPS was a minus 10%, but the turnaround in earnings has started the stock price to grow. Management owns 4% of RPM and as a result, I feel it deserves another look see.
ICU Medical produces and markets disposable medical devices. These devices protect health care workers and patients from catching infectious disease. Its price has almost doubled since March 2001. Its EPS fell off the past quarter but was still healthy. EPS for the past two quarters was 20% and 48%, respectively. ICU's annual EPS was 23%. The company has no debt and management owns 2.7%. The threat of infectious disease in hospitals and clinics has escalated in recent years.
I first recommended DLX in March 2001 at $24.06. Since then, it has gained almost 100%. This was one of the high dividend stocks (current yield 3.3%) I put in AAII's Pro Picks portfolio in April 2001 when its yield was 6.6%. Deluxe produces checks and business forms. It targets individuals and small businesses for its sales. Deluxe has no debt. Management owns 1% of the company. Its price has been rising almost without interruption since last March. Its annual EPS is 12%. For the past two quarters, EPS was 18% and 15%, respectively. The stock recently made a two-year high.
Huaneng Power is a return candidate from the 21 Small Caps index. It made very good profits during late 1999-2000. We sold it after it lost 25% of profits. It is now having another good run. HNP has 35,313,000 shares. The company is China's largest independent power producer with a generating capacity of 10,813 megawatts. Last quarter earnings per share were up 35% and the quarter prior was also up 35%. HNP's annual earnings per share was 13%. The bad news is HNP has debt of 47%. Its volume has been rising, along with its stock price. Since a huge amount of our nation's inexpensive imports come from China, HNP should continue to do well until dollar value declines between 25%-30%.
Please remember that these are incubating stocks only, for possible consideration into the 21 Small Caps Index. It's also possible that each of these stocks will be thrown out, because their price drops below our stop loss point or other fundamental and technical indicators turn negative.
| Buy Trades |
 |
|
|
|
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| 173 |
|
|
|
29.400 |
| 231 |
|
|
|
16.530 |
| 81 |
|
|
|
48.700 |
| 71 |
|
|
|
46.950 |
|
| Sell Trades |
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| 421 |
|
|
|
12.050 |
| 112 |
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|
34.050 |
| 193 |
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20.480 |
| 139 |
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24.010 |
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| KEEP REMAINING MONEY IN CASH ACCOUNT. |
