I Eat Bear

Buy 100 shares of NOV at the open
Buy 100 shares of RIG at the open
Buy 100 shares of MTW at the open
Buy 100 shares of CBI at the open
Once all that is done, I will take the remaining balance and buy ABP

A lot of my portfolio will look like mid-cap mania once it is complete. This certainly carries a risk, when large caps have recently been outperforming. It will also be a little heavy in the oil sector, which can't be helped right now. Despite falling oil prices, demand for drilling services should be up this year, and many these companies should do well, so I am adding more here.

One other item I might mention, is that for the most part, I have selected stocks with fairly low P/E's. In a potential (or very real) bear market, I find low P/E values to be much safer than some other stocks I like, Las Vegas Sands, for instance. But, the P/E is just to high there for my taste, the way the market has been acting lately. But, there are exceptions for every rule, and I will be making just that in selecting MTW and CBI.

I am not expecting barn burning returns from this portfolio. But, in the last round, the winners were under 5% gains, while many of the rest lost money. The market conditions have not improved since the last round, so safety, while fully invested, has been my goal. If I can end the round, north of a 10% gain, I may be a contender.

NOV - I like for the backlog of work they have, to create new drilling rigs.This company is not going away any time soon. Actually, I picked JOYG for much the same reason, but I find a much more favorable P/E with NOV.

RIG - another premiere oil driller, and it is going through some growing pains. It recently acquired Global Santa Fe, and will see synergies from that late this year. It however, does seem to have a compelling buy on it, as I think it is undervalued for the assets it has.

MTW - cranes, refrigeration machines, and ship building. Seems like it could at least add some diversification to this portfolio. Add that I think it took more of a beating in the recent market crashes than it deserved, and it could rebound nicely (or not).

CBI - Up until about two months ago, this stock had been on a recent tear to the top. Yes, it has taken a beating too, lately. If market fundamentals improve, this could well exceed the market. Then again, if it gets worse, the P/E here has plenty of room for more drop. So, I just hope for the best on this one right now.

ABP - Well, I don't think one small cap will kill me, and with P/E of about 3, it looks like it may get it's run up, and still be safe enough if the market tanks further. It has an excellent balance sheet. By the way, the P/E of three, says it's earnings should pay for the stock price in three years. In a short term game like the strategy lab, well, it may be just the right play. I would not invest a ton of money in this, but I think it may well have some long term potential. Any small cap stock, has a considerable risk, and this one is no different. It should be safer than many others though.

Comments: View Comments |  Friday February 1, 2008  |  Stocks: ABP, CBI, MTW, NOV, RIG,