Stock Picks for 2013!

Who out here has been reading DQYDJ for the last year… show of hands?  Remember last year we entered into a friendly contest at Financial Uproar where we wanted to demonstrate our stock picking prowess to a skeptical audience (because auditing my returns wasn’t enough!).

So, even though we beat the S&P in 2012, we didn’t win (we got trounced, in fact).  Let’s fix that in 2013, shall we?  Here is our entry into the 2013 Financial Uproar Stock Picking Contest.  (Scroll down for a post-mortemon 2012).

DQYDJ’s Picks For 2013

• TTM – Tata Motors – Even though the book value doesn’t inspire massive amounts of confidence in a value investor and folks like JT will caution me against trusting any measure which relies on Free Cash Flow in a foreign company, I’m a believer in Tata in 2013.  No guesses as to what a dominant position in cars and trucks in India means in 2013, but I like it regardless.
• KLIC – Kulicke & Soffa Industries - Last year I picked a technology stock in my fantasy portfolio.  It killed my returns.  (Note: as an engineer, I never touch tech in my portfolio.)  But this year?  KLIC, if you go buy the numbers, is a value investor’s dream.  It hits high in every category, except love from the street.  Here’s to hoping that changes in 2013!
• EBIX – Ebix, Inc. – 9.69% Return on Assets, 21.02% on Equity hit approximately the right notes in this economy, but here’s a value stock which has some crossover value as a growth play.  Two tech stocks – am I crazy?  Yes.  This is fantasy, not my real portfolio… so why not go for the gold?  I heard the loser wins a plunger.
• CACC – Credit Acceptance Corp. – I know, you don’t need to tell me – credit, especially at the low end, might be a top target of the recently minted Consumer Financial Protection Bureau.  I’m not particularly worried – the CFPB generally targeted larger banks in 2012, and most regulation is done at the state level.  I’m confident in this pick for ’13.

DQYDJ 2012 Stock Contest Post-Mortem

My portfolio: + 17.81%
Jan 3, 2012 S&P 500 Open: 1,262.82
Dec 31, 2012 S&P 500 Close: 1,426.19
S&P Return: +12.93% (add another 2% for dividends… when S&P releases dividend totals we’ll know for sure), call it 15%.

So, roughly 3% market out-performance.

Yep, you’re right.  Inteliquent was a dumb choice, down 75% (although it did pay a $3.00 special dividend, so I escaped with my scalp intact).  However, the other three choices killed it, especially Vascular Solutions.  AFL and PDLI I owned both in the contest and in reality, and both were solid performers – returning greater than the S&P 500 and paying a divided, to boot.

So yeah, 3/4.  Oh well.  May as well double down, right?

Full Disclosure: I own shares in TTM and PDLI.  Even though I don’t own shares of the other companies listed today, I may purchase them in the future – especially the non-technology stocks.