Xerox Corporation (XRX), Arch Coal Inc (ACI): 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:

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 $971.94 (1.8%)
QLogic (NASDAQ:QLGC) $11.46 86.39 $844.03 (14.7%)
Dendreon $5.97 165.82 $661.62 (33.2%)
Dell (NASDAQ:DELL) $13.37 74.05 $993.01 0.3%
Staples $13.48 73.44 $1,178.71 19.1%
Arkansas Best $10.83 91.41 $1,795.29 81.3%
Arch Coal (NYSE:ACI) $7.03 140.83 $581.63 (41.3%)
Skullcandy (NASDAQ:SKUL) $6.71 147.54 $836.55 (15.5%)
France Telecom $11.64 85.05 $852.20 (13.9%)
Xerox (NYSE:XRX) $8.16 121.32 $1,146.47 15.8%
Cash $0.06
Dividends receivable $77.55
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance 8.5%
Performance relative to S&P 500 (9.1%)

Source: Yahoo! Finance.

This week’s winner
Xerox Corporation (NYSE:XRX)

Shares of printing solutions and IT-management specialist Xerox Corporation (NYSE:XRX) took the top honors this week, advancing 6.8%, after receiving positive comments from research firm Brean Capital. Brean commented that it believes Xerox Corporation (NYSE:XRX) remains attractive based on its cash flow, and reiterated its “buy” rating and $10.50 price target on the company. I see the coming explosion in Medicaid patients – especially in California, where Xerox Corporation (NYSE:XRX) processes all Medicaid claims – due to the implementation of Obamacare as the biggest boost to Xerox Corporation (NYSE:XRX)’s bottom line moving forward.

This week’s loser
Coal miner Arch Coal Inc (NYSE:ACI) took the dubious honor of portfolio goat for a second-straight week, matching Xerox Corporation (NYSE:XRX)’s 6.8% gain with a 6.8% weekly loss of its own. The story here continues to be much of the same: coal prices and demand remain weak as renewable energies are gaining prominence, with most being now just as cost-effective as coal (if not cheaper in some cases). Arch Coal Inc (NYSE:ACI)’s case was hurt even further when metallurgical coal producer Alpha Natural Resources, Inc. (NYSE:ANR) predicted that further mine closures would be needed in the U.S. to stem oversupply and poor pricing.