The Motley Fool CAPS is a place where you can test your wits against fellow retail and professional investors. I began playing in the fourth quarter of 2012 and already have a player rating of 96.49 with a score of 1,174.79.
The player rating indicates how you compare against fellow players and the score is a tally of every percentage point where your selection outperforms its benchmark. Personally, I use CAPS as a way to track my own investments for disclosure purposes.
My selections are chosen based on the stock-picking formula found in my book “Taking Charge With Value Investing (McGraw-Hill, 2013).” While I have done great to-date, let’s go ahead and see what moves I am making for the following six months.
Picking up steam into the final six months
Alcatel Lucent SA (ADR) (NYSE:ALU) has posted a gain of 36.9% since adding it to My CAPS — its index has gained 15% — thus creating a score of 21.8 to My CAPS. However, I think the gains are just getting started.
Back on June 2 I wrote an article comparing Alcatel-Lucent (my 2013 Value of the Year) to Sprint Nextel (my 2012 Value of the Year) and so far the comparison is proving true. Alcatel Lucent SA (ADR) (NYSE:ALU) has gotten a late start – with all of its 40%+ YTD gains coming since the end of April – but has a lot going in its favor for the end of the year.
Not only is it the cheapest of any telecom equipment stock, but the company has a massive restructuring program in effect and is operating in an industry that is outperforming expectations. Last month Ciena Corporation (NASDAQ:CIEN) presented quarterly results that were far above expectations, citing increased telecom CAPEX due to mobile/Web traffic. If accurate, Alcatel-Lucent will benefit – making it a good play as the company continues to embark on restructuring initiatives.
Will it finally rise?
I know it lacks originality to choose Apple Inc. (NASDAQ:AAPL), but the stock really is cheap and has a lot going in its favor during the second half of the year. Not only will it release a new update to its operating system, but also is expected to unveil both a new high and low-end model iPhone.
In the process, there is iOS in the car, radio, and possibly iTV in the works. While these are exciting, let’s not forget the company’s massive $60 billion plan to return capital and buyback shares, which should create a floor for the stock. Therefore, at seven times next year’s earnings minus cash, I like its chances to be a top CAPS performer, and add to the 4.88 points that it has created for My CAPS.
Is there light at the end of the tunnel?
Shares of Hewlett-Packard Company (NYSE:HPQ) have rallied almost 75% in 2013. However, I think it could maintain this rate of return throughout the remainder of 2013.
Last quarter HP saw a double-digit rally as it upped its fiscal year 2013 EPS guidance and the company’s CEO Meg Whitman revealed a boost in the PC market. Overall, Whitman has done a fabulous job at Hewlett-Packard Company (NYSE:HPQ). The CEO has focused her attention on cash-flow and has produced fundamental improvements.