2012 Stocking Picking Contest

Last December I received an email to join the 2012 Island of Misfit Bloggers Stock Picking Contest. How could I pass up picking 4 stocks just so I could see who the competition was going to be?

I fully intended to roll up my sleeves to do some research and analysis on stocks that could do well in 2012. That didn’t happen.

Instead, as the holidays approached and then rolled by the December 31st deadline was starting me down – it was the 29th. It was time to pick some stocks. But what criteria was I going to use?

At the end of the day, quite literally, I opted to pick 4 stocks that make sense to me which can be linked to sustainability of some definition. I also picked the stocks with total disregard to whether I would truly considering buying the stocks with our own money.

Now that the first quarter of the year has passed this long overdue post about the contest and my picks moved back to the top of the to-do list. It also helps that thus far the stock selections have performed quite well.

 

Apple (APPL)

The founder and visionary of Apple, Steve Jobs, passed away in 2012. His ideas and empire are still very much a force in technology, and will remain a force for some time. The folks running Apple should understand that the legacy of R&D, brand recognition and trust, not to mention market dominance means steer the boat, don’t rock it.

The iPad(3) was released to good reviews and Apple will also release new Macbooks and likely the next generation iPhone in 2012. And don’t forget Apple TV will be launched as well. I won’t be surprised if Jobs’ fingerprints are all over the iPad7.

Apple also announced a 1.8% dividend yield. 1.8% of $618 = $11 per share. JT is right, north of the border we do love our Canadian dividend stocks.

Apple products cost more than the competition. The product is better than that of the competition. Ditto marketing. And today I learned that 51% of households own at least one Apple product. Our household does not have an Apple product but we did give one away last November.

Cost: $405.55 Current Price: $599.95

Overall Return: 48%

 

Ecology and Environment (EEI)

We live on a continent where companies are (usually) forced to at least consider the impact they make on the environment. Unfortunately we also live on a continent where companies screw up and environmental disasters occur. This is where EEI comes in. This company provides a slew of environmental consulting services to both private and public sectors that don’t naturally migrate toward sustainability.

On the flip side, EEI also helps deal with global pandemic mitigation and reaction and assists in the restoration of environmentally damaged areas. Add a 3.20% yield for those interested in dividend investing, this 40+ year old company is one that caught my eye quite some time ago.

Disclosure: We have interests in EEI.

Cost: $16.16 Current Price: $15.22

Overall Return: – 5.8%

 

Potash Corp. of Saskatchewan, Inc. (POT)

Potash. You might have heard of it. Potash is a mine salt that contains potassium. It is used in water softening, pharmecutecal production, cement and fire extinguishers (to name a few). The thing is, potash is also used in snow and ice melting, to deal with industrial water treatment and in synthetic rubber manufacturing.

Doesn’t sound like a friendly product, right? Well, potash is also used for producing fertilizer (in which crops grow), making stock animal feed and even beer brewing!

Putting aside the long discussion regarding industrial farming and mass food production, let’s face it: the humans on this planet need to eat. While it sure would be nice if we could receive organic and local food the food production and distribution systems in place today dominate the sustenance industry.

Canada produces more potash in a year than any other country, and, has the largest reserves as well. An Australian company, mining giant BHP, tried to buyout POT for $39 billion dollars with a hostile takeover in late 2010. The Canadian government intervened and said “nuh uh, you aren’t buying our gold mine”.

The world must eat.

Cost: $41.28 Current Price: $45.69

Overall Return: 10.7%

 

Medical Marijuana, Inc. (MJNA.PK)

A few decades ago I had a “what if” conversation with a few guys about business potential if marijunana was legalized. In the early 90s the whole notion was a foreign concept and the guys I was speaking with had dreams of visiting Amesterdam where they could, ahem, experience system first hand. To my knowledge these guys didn’t follow through with their idea.

The folks that did find the motivation to follow through don’t likely go to stakeholder meetings wearing tie-dyes.

MJNA is a company that is looking to take advantage of a business opportunity. 17 states have made marijuana legal for medicinal purposes. Sure, they are involved in exploring some 55,000 other uses for Cannabis and industrial hemp but my guess is they’re in at the ground floor of a societal change in attitude toward the use of good ol’ Mary Jane.

The state already tells us that smoking cigarettes and drinking booze are legal if you are a certain age. The fight against the weed has been, and is being, lost. Many government resources (read: your taxes) are used fighting the futile fight. Trying, convicting and imprisoning those who are dangerous, and those that are not is not cheap. Organized crime gains when our governments recognize they could do so – and tax the heck out of the product (like booze and smokes).

Someone has to provide services that deal with the financial & legal intricacies, distribution, production (including testing), revenue collection and management of an increasingly legal enterprise that has made a LOT of money for distributors of pot (illegally) for decades. Right?

Plus, I wanted to make a pick that would raise eyebrows and produce a few chuckles, smirks or looks of puzzlement.

Cost: $0.017 Current Price: $0.057 (yes, just over 5 1/2 cents)

Overall Return: 245.5% !!!

 

So those are my four stock picks for 2012. For one reason or another each pick, at least to me, without any true financial analysis being done, make business sense and in one way or another can be linked to sustainability. The point of the contest is to have some fun and it has done precisely that. After Q1 of 2012 SPF sits in first place! The four picks are up 74.6%

13 comments to 2012 Stocking Picking Contest

    • JT

      Is it personal now? ;)

      I have to admit, I felt pretty good about my standing after ADGF got bought out – definitely juiced my own portfolio, but didn’t do much to keep pace with SPF in the competition!

      Give it time. MJNA is a wild-card that can’t be predicted, but I know I’d pay exactly $0 for the company today. Hopefully the pump and dumpers stay off it, because that’s exactly the company they love to buy. That thing could be $.30 per share in December, just as it could be one-half cent. Time will tell, but I’m not worried about it until the final days of the competition.

      Congrats to you, SPF. But we still have three more quarters left in the year. :D

      /end sore loser.

      • Oh, I know JT. Heck, just Mon/Tues this week it lost about 15% of the gains it had made!

        The point of this exercise, for me, wasn’t to get technical and spend any REAL time making picks. More of a “hey, what might make sense given the day and age” stock selection. It was fun. More fun that I didn’t lose 150% of MJNA.

        I am certainly not counting on it for the contest. If it breaks even i’ll be content!

  • ShortRoadTo

    Most of the stock picking contests are won by picking penny stocks that skyrocket. Way to find one that had such a great return.

    • Even without the small stock pick we did decently enough – about 16% return. If I had picked a larger company, given how good Q1 2012 has been we likely would have been over 20%. Apple has been dominant.

  • Looks like you did pretty well for yourself – did you invest any real cash in these?

    • We are invested in EEI. Apple is priced so high i’d need a windfall to invest. Potash – we’d look @ but ultimately would likely pass. The MJ one – I might throw $500 into it if I ever get more advertising dollars for this site (money we don’t count on!).

  • Ouch, I am taking a whooping in my picks so far!

    The good news is that my wife has APPL in her TFSA account.

  • Congrats on your success so far SPF! Apple certainly is the stock market darling of the year. I’m curious to know what happened, if anything, with EEI that caused their nosedive a few weeks back. If not for that, you’d be up even more! I definitely would love to get in on this competition next year.

  • Nice return on some of those stocks – I need to start researching individual stocks. :) My lack of experience puts me at a huge disadvantage.

    • I’m still new at this too. This was more of a gut feel, what makes sense to me given the world we live in. The great thing about making picks, and not putting new money into the equation, is that you can try what interests you without risk. Would I have put $1000 down to buy 50,000 MJNA? Unlikely.

  • You are doing great with your investments. Much better than I’m doing with mine – hypothetical or otherwise.

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