Stocks on Watch – March 2016

The strategy of these 8 portfolios has been to purchase individual stocks, and to hold them for the medium term.  These portfolios are not the same as an individual investor who seeks to invest for their long term financial future – they should utilize low-cost ETF’s and brokerage CD’s as is described in the “basic plan” that is linked to here or at the top of the site.  Portfolio 2 (see link on the right side of the page) has now converted to a long term type of model.

The reason we employ this strategy is because 1) I want to teach the principles of investing 2) I want to encourage thrift (savings) with the “match” concept 3) I want the beneficiaries to be actively involved in selections and see the consequence of their selections (stocks go up, stocks go down).  In addition, choosing stocks teaches a lot about capitalism and is a fundamental aspect of everything that happens in the world of business – stocks move up and down due to business fundamentals, their particular industry situation, the impact of commodity prices, the impact of foreign currencies vs. the US dollar, the geopolitical situation, and due to the actions of our central bank (ZIRP).  It is my selected role to attempt to teach about all of these concepts at once through the act of stock selection and portfolio changes.  These stock portfolios are not intended to be their entire net worth – if it was, then I would recommend moving to something more similar to Portfolio 2, above.

Given that we use individual stocks, we need to “watch” these stocks, especially if they fall significantly and stay down in price.  We also look for stocks that might have hit their highs and are on their way down, although we would be more likely to “ride the winners” over the medium term.  Portfolios 2, 7 and 8 don’t have any stocks on watch.

Stocks on watch

Portfolio 1

  • Statoil (STO) – Norwegian oil company, hit by the fall in crude as well as the fall of the local currency vs. the US dollar.  Will hold – seems unlikely they will cut their dividend which supports their current price.  The company will likely raise their debt level which is sustainable.
  • Novartis (NVS) – Swiss drug company, a recent purchase.  We will see how earnings play out at the end of April and how the company presents forward guidance.

Portfolio 3

  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • Wynn (WYNN) – A casino operator with interests in China, hit recently by a crackdown on corruption and gambling in China.  The stock was in the 60’s and came back into the 90’s and is on the upswing.  Will look to see if it get’s into the 100’s and make a decision but don’t want to sell while it is rising.
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding

Portfolio 4

  • Coca Cola Femsa (KOF) – Central American Coca Cola distributor, hit by the decline in currency value against the US dollar and also turmoil in local countries.  KOF has bounced up from the 60’s and recently crossed $80 / share.  Will watch and see if it retains upward momentum after earnings.
  • Devon Energy (DVN) – US oil company hit by recent collapse in commodity prices.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • Royal Dutch Shell (RDS.B) – European oil company hit by the recent collapse in commodity prices and the Euro / UK Pound vs. the dollar.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • Statoil (STO) – Norwegian oil company, hit by the fall in crude as well as the fall of the local currency vs. the US dollar.  Will hold – seems unlikely they will cut their dividend which supports their current price.  The company will likely raise their debt level which is sustainable.
  • Oracle (ORCL) – while this stock has been doing well, Oracle faces severe competition from the cloud and resulting price pressures on their product.  Gross margins are still going up and they are claiming significant cloud earnings.  We will keep watching these trends
  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • Novartis (NVS) – Swiss drug company, a recent purchase.  We will see how earnings play out at the end of April and how the company presents forward guidance.

Portfolio 5

  • Linked In (LNKD) – Online business networking company that recently gave poor forward guidance and had its stock price cut in half.  We are going to continue to watch Linked In since it seems over sold but if it doesn’t move we will sell it.
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding

Portfolio 6

  • Coca Cola Femsa (KOF) – Central American Coca Cola distributor, hit by the decline in currency value against the US dollar and also turmoil in local countries.  KOF has bounced up from the 60’s and recently crossed $80 / share.  Will watch and see if it retains upward momentum after earnings.
  • Royal Dutch Shell (RDS.B) – European oil company hit by the recent collapse in commodity prices and the Euro / UK Pound vs. the dollar.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
  • ConocoPhillips (COP) – An oil and gas major, hit by the recent collapse in oil prices.  They reduced their dividend by 75% which impacted their stock price, as well.  We are going to watch the price of oil which drives many of the companies on this list.  It went from the high 20’s up crossing the 40 dollar barrier.  If it gets into the middle 40’s and stays there many of these companies will be in OK shape for holding
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