Stock Picks for 2013!

December 31st, 2012 by 
PK

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 SolutionsAFL 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.

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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