Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Arkansas Best Corporation (ABFS), Staples, Inc. (SPLS), Dell Inc. (DELL): One Person’s Trash Is Another Person’s Treasure Portfolio

Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the “One Person’s Trash Is Another Person’s Treasure” portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill and would expect to drastically outperform the benchmark S&P 500 over the coming 12 months. If you’re interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:

Dell- Staples
Arkansas Best
Arch Coal

Now, let’s get to the portfolio and see how it fared this week:

Company Cost Basis Shares Total Value Return
Exelon $31.25 31.68 $945.96 (4.4%)
QLogic $11.46 86.39 $966.70 (2.4%)
Dendreon  $5.97 165.82 $525.65 (46.9%)
Dell  $13.37 74.05 $1,021.15 3.1%
Staples $13.48 73.44 $1,047.99 5.9%
Arkansas Best  $10.83 91.41 $2,202.07 122.4%
Arch Coal  $7.03 140.83 $612.61 (38.1%)
Skullcandy  $6.71 147.54 $770.16 (22.2%)
Orange $11.64 85.05 $874.31 (11.7%)
$8.16 121.32 $1,210.77 22.3%
Cash $0.06
Dividends receivable $99.26
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance 9.4%
Performance relative to S&P 500 (6.6%)

Source: Yahoo! Finance.

Arkansas Best Corporation

This week’s winner

Amid the worst sell-off we’ve seen in a week over the past year for the broad-based S&P 500, it isn’t too shocking to discover that trucking company Arkansas Best Corporation (NASDAQ:ABFS) was the top gainer over the past week, adding 2.6%. There wasn’t any company-specific news moving the stock this week; however, the positive overhang from its recently signed collective bargaining agreement with its labor union appears to be the likely force driving the share price higher. Even I’m a bit stunned at the magnitude of the move in shares, but I do see plenty of value here over the long run. Shares are now up 122% since inception of this deep value portfolio.

This week’s loser

But for every winner there must always be a loser, and that title goes to office-supply superstore Staples, Inc. (NASDAQ:SPLS), which imploded, down 16.9% on the week, after reporting disappoint second-quarter results and a weaker-than-expected full-year outlook. For the quarter, Staples, Inc. (NASDAQ:SPLS) delivered a 2% decline in revenue to $5.3 billion as profits declined to $0.16 per share from $0.19 in the year-ago period. Store closures and an ongoing restructuring took its toll on the company as recently strong international sales also tumbled 8%. Furthermore, Staples, Inc. (NASDAQ:SPLS) lowered its full-year EPS outlook to a range of $1.21 to $1.25 from prior guidance of $1.30 to $1.35. Despite the miss, cash flow for the quarter saw a nice increase from the year-ago period, and I think that with OfficeMax and Office Depot merging, the store attrition that will be created will give Staples, Inc. (NASDAQ:SPLS) a chance to pick up plenty of back-to-school shoppers.

Also in the news …

Coal miner Arch Coal Inc (NYSE:ACI) did end the week marginally lower, but not before announcing the sale of its Canyon Fuel subsidiary in Utah to Bowie Resources for approximately $423 million. This sale represents Arch Coal Inc (NYSE:ACI)’s ongoing efforts to streamline its operations by selling off non-core assets to reduce costs and raise cash. Arch expects to record a pre-tax gain of roughly $120 million in the upcoming quarter on the sale and anticipates total savings will equal $200 million between 2014 and 2017 as it rids itself of all of its Utah assets.

In this week’s episode of “Dell Inc. (NASDAQ:DELL)s of our Lives,” we actually received useful information rather than just buyout banter. Dell Inc. (NASDAQ:DELL), on Thursday of last week, reported its second-quarter earnings results, which were actually a bit “less bad” than anyone expected. For the quarter, PC profits fell by more than 70% as total revenue came in flat at $14.5 billion. Amazingly, though, adjusted EPS topped the Street’s expectations by $0.01 to $0.25. The next big date on shareholders’ minds is Sept. 12, the official shareholder vote on the proposed Silver Lake/Michael Dell buyout at $13.75 per share after multiple delays. I can tell you one thing: I’m certainly ready to cast my ballot!

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.