Being “selective” doesn’t mean you’re missing out… it’s about sharpening your focus to ensure success in everything you do!One of the challenges many investors face is how to chose stocks to invest in. How do you know which stocks, or how many for that matter, you should buy at a given time? Unfortunately, there are no easy answers really… but there are some general principles that will help guide you. I’ll provide you some information on that in an upcoming article…
For now, we are going to focus on 5 Stocks and trade them every day from November 1st with a deadline of December 31st with my personal guarantee of a 5% cumulative return by the end. We’ll be using the Evening Investor Strategy as our guideline. Remember, to participate in the “guarantee” you need to follow the rules provided. For those who do not participate in the guarantee, you can still follow along.
Let’s get started:
- First, I’m going to provide you with the 5 Stocks below. No matter what happens, we’ll stick with these 5 stocks.
- Then, I’ll create a table for each stock… so you can follow along each day. Each day, the purchase price for the day will be posted… and for any positions we are in, the stop loss will be updated.
Ready?
The 5 Best Stocks
These are the 5 best stocks I’ve chosen for this purpose… while there are lots of great ones out there, these will provide us with the criteria necessary to demonstrate the reliableness of the Evening Investor Strategy.
#1 - Apple (AAPL)
Apple is arguably one of the world’s most well known companies… and it you take a look around you you’ll see why. Whether it is a potable music device, a personal computer, or a smart phone, Apple is taking a bite out of the competition. Besides the remarkable growth Apple has demonstrate over the past several years, Apple carries no debt. Furthermore, Apple continues to impress its clients and investors with new products… fueling their earnings.
Steve Jobs’ recent death was tragic in many respects… and the world really has lost a visionary. Perhaps most impressive was his ability to keep things simple… to put in the hands of every generation tools they can use, quite intuitively. While there are some who are hesitant over the impact of Jobs’ death on the ability of Apple to continue in its visionary ways, the products already envisioned and forecast to go forward in the next couple of years should continue to impress consumers and investors alike.
#2 - LuluLemon (LULU)
I love companies that are growing through sales and have low to no debt. Lululemon fits that criteria… with 0 debt and a three year sales growth rate of 39%. Couple that with a 36.2% Return on Equity, Lululemon is positioned to keep on growing.
When I look around at general everyday consumers, I often see three things… and Apple product, a coffee beverage of some kind, and some Lululemon. Somehow, this company has mastered the ability to target a multigenerational cliental. Trading with excellent volume, Lululemon is a great stock to trade when the technicals are right.
On November 8th, 2011, LULU announced the launch of ivivva, an online dance and athletic apparel store for young girls across the United States. Offering sport bras, tanks, leotards, jackets, shorts, etc… which will only help the bottom line of LULU.
#3 - Hansen Natural (HANS)
Hansen Natural tops my stock choices with its strong fundamentals such a 0 debt and 30% annual Return on Equity. But it’s not all about the fundamentals… Take a look around you again… see what people are consuming and you’ll see Hansen’s Natural products within reach. From the sodas to the fruit juices to the Monster energy drink label, Hansen Natural has reached into many homes. Furthermore, quarterly financial results on November 3rd, 2011 were on track.
I recently highlighted Hansen Natural in a series on the best cold beverage stocks in which I pointed out the strength of the stock price in 2011… but again, similar to other leaders, investors shouldn’t shy away from a rising stock price. Simply be prudent in using the technicals to guide one’s transaction choices.
#4 - Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill is a leader in its sector without debt… Combine any stock with rising sales, new stores opening, and 0 debt and you’ll get a winner. With a 23.6% Return on Equity, Chipotle Mexican Grill is positioned to continue to be a leader.
With nearly 1,100 stores, Chipotle Mexican Grill has significant recognition and reach. In fact, when planning a recent trip, I took a few moments to look up where I might find one… since where I am, they don’t exist yet. I recently wrote a brief article on Chipotle Mexican Grill discussing some of the factors of this company and stock… and decided it would be a healthy choice for any portfolio.
#5 - Dollar Tree (DLTR)
With over 4,100 locations in 48 states as well as Canada, Dollar Tree is the leader of this growing segment within consumer discretionary. With the vast majority of its diverse selection of items selling for less than a dollar, this company is making an impact one sale at a time.
And all those dollars are adding up… with a 28.6% Return on Equity and relatively low debt/equity ratio of 17%, Dollar Tree continues to expand leading many investors to believe, money really does grow on Dollar Trees!
Here’s where we’ll keep track…
I don’t know if I could have chosen two more difficult months… because as soon as November hit, the markets began dropping. But anyone can make money in a bull market right? So, at the end of the day, this is a true test of how well a strategy works in a bear market too… Even stocks who were posting better than expected numbers like HANS and DLTR struggled a little. What’s interesting is how we protected capital, minimized risk, and maximized returns. And the best part is…
| Stock Symbol | Date Order or Purchased | Date Completely Sold | Purchase or Order Price | Stop Loss #1 | Stop Loss #2 | % Gain | Running Total |
|---|---|---|---|---|---|---|---|
| AAPL | 2011/11/08 | 2011/11/09 | $403.11 | $397.00 | One Order | -1.5% | -1.5% |
| AAPL | 2011/11/15 | 2011/11/16 | $387.75 | $384.21 | One Order | -0.9% | -2.4% |
| AAPL | 2011/11/22 | 2011/11/23 | $374.18 | $370.83 | One Order | -0.9% | -3.3% |
| AAPL | 2011/11/28 | 2011/11/29 | $373.65 | $370.22 | One Order | -0.9% | -4.2% |
| AAPL | 2011/11/30 | 2011/12/06 | $381.33 | $390.28 | One Order | 2.4% | -1.8% |
| AAPL | 2011/12/08 | 2011/12/12 | $393.44 | $390.92 | One Order | -0.6% | -2.4% |
| * Apple did not trade up 2 days in a row for the entire month of November. It continued in December to be extremely volatile… and while we didn’t end up with a positive result with this name, if we had purchased it on Nov. 1st and sold it on the 16th, we would have been down 5%. So, we are ahead by 2.6%. | |||||||
| Stock Symbol | Date Order or Purchased | Date Completely Sold | Purchase or Order Price | Stop Loss #1 | Stop Loss #2 | % Gain | Running Total |
|---|---|---|---|---|---|---|---|
| LULU | 2011/11/02 | 2011/11/03 | $56.02 | $54.28 | One Order | -3.2% | -3.2% |
| LULU | 2011/11/08 | 2011/11/09 | $56.46 | $56.47 | One Order | 0% | -3.2% |
| LULU | 2011/11/15 | 2011/11/16 | $54.98 | $52.47 | One Order | -4.8% | -8% |
| LULU | 2011/11/28 | 2011/11/29 | $49.00 | $48.02 | One Order | -2% | -10% |
| LULU | 2011/12/08 | 2011/XX/XX | $46.06 | $46.44 | One Order | 0.9% | -9.1% |
| * Lululemon was extremely volatile… and it dropped by 20.1% since November 1st… while our position ended down 9.1%. With one larger than normal loss (4.8%) we ended down more than normal, but still ahead of the stock “buy-and-hold” approach by over 11%. That’s a substantial savings in value… and a great example of minimizing risk. | |||||||
| Stock Symbol | Date Order or Purchased | Date Completely Sold | Purchase or Order Price | Stop Loss #1 | Stop Loss #2 | % Gain | Running Total |
|---|---|---|---|---|---|---|---|
| HANS | 2011/11/04 | 2011/11/08 | $91.36 | Sold 1/2 @ $94.10 | Sold @ $92.21 | 2% | 2% |
| HANS | 2011/11/11 | 2011/11/17 | $92.08 | $92.93 | One Order | 0.9% | 2.9% |
| HANS | 2011/11/28 | 2011/12/14 | $87.36 | Sold 1/2 @ $94.78 | $Sold 1/2 @93.22 | 7.6% | 10.5% |
| HANS | 2011/12/16 | 2011/XX/XX | $94.31 | $95.25 | One Order | 1% | 11.5% |
| * HANS reported some great results during our exercise… yet the markets kept it in check. Nevertheless, we netted 11.5%. | |||||||
| Stock Symbol | Date Order or Purchased | Date Completely Sold | Purchase or Order Price | Stop Loss #1 | Stop Loss #2 | % Gain | Running Total |
|---|---|---|---|---|---|---|---|
| CMG | 2011/11/03 | 2011/11/08 | $335.49 | $335.98 | one order | 0.2% | 0.2% |
| CMG | 2011/11/22 | 2011/11/23 | $310.48 | $304.08 | one order | -2.1% | -1.9% |
| CMG | 2011/11/28 | 2011/12/06 | $309.50 | $332.92 | $330.38 | 7.2% | 5.3% |
| CMG | 2011/12/07 | 2011/12/09 | $336.83 | $333.43 | one order | -1% | 4.3% |
| * If we had bought CMG on Nov. 1st, we would be down 2.6%…but instead, we are up 4.3%, a difference of 6.9%. Extend that beyond a month and a half and again you can see how the Evening Investor Strategy produces better results with less risk. | |||||||
| Stock Symbol | Date Order or Purchased | Date Completely Sold | Purchase or Order Price | Stop Loss #1 | Stop Loss #2 | % Gain | Running Total |
|---|---|---|---|---|---|---|---|
| DLTR | 2011/11/09 | 2011/11/10 | $80.60 | $78.39 | one order | -2.8% | -2.8% |
| DLTR | 2011/11/22 | 2011/11/25 | $76.40 | $76.32 | one order | -0.3% | -3.1% |
| DLTR | 2011/11/28 | 2011/12/13 | $77.54 | Sold @ $82.84 | Sold @ $81.47 | 6% | 3.1% |
| * DLTR produced some fakes in early November, but left us with a nice gain in early December, resulting in an overall gain of 3.1%. | |||||||
* These tables are based on trading according to the principles of the Evening Investor Strategy and is used for information purposes only. These are real examples used for illustrative purposes only. They are not designed to reflect my current holdings. These are not recommendations, nor is any information found on this site (please see disclaimer). For more information, consider the Evening Investor Strategy Articles. For other trading strategies, please visit the Weekly Newsletter.
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