Jeffrey Vinik’s Most Promising Stock Picks

Coal stock Arch Coal Inc (NYSE:ACI) was another new position in Vinik’s portfolio, at 7.1 million shares. It is down 50% in the last year as demand for coal has been weak; many utilities, for example, have been switching to natural gas as a fuel. 20% of the outstanding shares are held short, and analysts actually expect net losses to be higher in 2013 than they were in 2012. We’d also note that Arch Coal, similarly to Westlake, has a beta greater than 2 and so movements in its stock price tend to be correlated with those of the S&P 500.

ANN Inc (NYSE:ANN), a $1.5 billion market cap women’s apparel retailer, was another small-cap stock that Vinik owned. Renaissance Technologies, founded by billionaire Jim Simons, also had a significant position in the stock (research more stocks Renaissance owned). In its most recent fiscal quarter (which ended in October), revenue was up 9% from the same period in the previous fiscal year and this helped push net income 26% higher. At 15 times trailing earnings it may be worth further research.

Vinik cut his stake in Core Laboratories N.V. (NYSE:CLB) by 10% but still owned about 310,000 shares of the stock. Core Labs is another stock that has since passed above $5 billion in market cap. The company provides oil and gas services, particularly related to characterizing and analyzing reservoirs. Core Labs carries trailing and 2013 earnings multiples of 25 and 23, respectively, so the market is pricing in considerable growth; however, in the third quarter of 2012, the company did see 21^ earnings growth from a year earlier.

Disclosure: I own no shares of any stocks mentioned in this article.