Final Tweaks to 2014 Winning Value Portfolio

 | Dec 30, 2013 | 3:30 PM EST  | Comments
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Stock quotes in this article:

irdm

,

laws

Last week, I unveiled the 2014 Winning Value Portfolio, my third annual portfolio of 10 stocks that would compete against the market for the entire year. Once picked, this portfolio would not be changed. 

I assume an equal allocation of each security at 10% of the portfolio. Later this week, I will unveil the final performance of the 2013 class, but as of last month, this group was up nearly 50%, thanks to a nearly 30% rise in the S&P 500. This year was easy pickings for anyone who was invested in the stock market.

Since 2014 is not yet upon us, I reserve the right to make any final tweaks to the 2014 portfolio. Last week, the final 10 consisted of the following names:

  1. Bank of America (BAC)
  2. Deere (DE)
  3. Gentex (GNTX)
  4. Potash (POT)
  5. Chesapeake Energy (CHK)
  6. Lawson Products (LAWS)
  7. General Motors (GM) Class B warrants
  8. Apple (AAPL)
  9. Wendy's (WEN)
  10. Horsehead Holdings (ZINC)

I was thumbing through several issues of the Value Line Investment Survey last week when I came across an interesting company by the name of Iridium Communications (IRDM). Iridium is a small-cap provider of mobile communication services to commercial and the government sectors. But Iridium is more than that. The company truly possesses the largest global communications footprint in the world. In the most remote areas in the world, Iridium's satellites provide signals, and this is why the U.S. Department of Defense relies on the company.

The company recently lowered its long-term earnings guidance because of a little uncertainty in the commercial segment. The stock tanked.

Shares now trade for under $7 and less than 9x earnings. Book value per share stands over $12, with tangible book at over $10. To make room for Iridium, I am removing Lawson Products. I will dig deeper into Iridium in the new year.

After the run of 2013, which provided the best market return since 1996, it will be interesting to see how 2014 stacks up. What I can say is that capital preservation remains the name of the game. I believe this portfolio possesses the quality and price fundamentals to do just that. Happy New Year.

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