Today’s article is going to be a quicker one. I’ve been attacked by the allergy monster over the last couple of days. When I’m not sneezing, I’m just trying to get a breath of air in.

I feel like I’m falling behind on everything and with this being the last week of school for the kids, there won’t be much catching up next week. Some blogger dads were talking about what they wanted for Father’s Day and I think everyone universally said the same thing, “Some time off!”

Today, I wanted to do something that’s a little controversial – review stock picks. I’m a big believer in index funds. It’s the “Laziest” path to wealth. For many people, investing advice can be as simple as just keep buying up shares of Index 500 ETF stock. I’m a little more diversified, but that’s my general investing philosophy as well…

… except that I like to have some fun too!

I can’t shake the idea that there are people out there who bought Amazon at $3 a share and are enjoying it at $1700 a share now. How can that feel anything less than awesome, right?

I know that I’m not going to find the next Amazon. Even if I did, I’d probably sell it at $6 and collect my sweet 100% return – while I miss out on the $1700 per share gains.

That doesn’t stop me from taking a little side money, looking for some big companies that aren’t doing so well, and investing with the hope that they’ll double my money. Every now and again, I write an article about stocks that I think could do just that.

Let’s review and see those stocks have done:

Five “Bargain” Stocks to Consider Buying Now

I wrote his on August 24, 2017. The dates on my articles reflect the last time they were updated, so it’s easiest to use the first comment date as a guideline for when the article was written.

The stocks I picked at the time were: Under Armour, IBM, SNAP, Chipotle, and Twitter. They each has some kind of sad story to tell. Under Armour had the death of retail. IBM had years of no growth. SNAP looked like it was going to lose to Instagram. Chipotle had people getting sick from their food. No one knew how Twitter was going to grow or make money.

Besides their sad story, they had two things in common, they were household names and I didn’t see them folding up shop any time soon.

Here’s what their performance looks like:

I think it would be safe to say that Under Armour, Chipotle, and Twitter were home runs while IBM and SNAP were flops.

Actually, I don’t view IBM or SNAP as big flops. IBM has paid out around a 5% dividend during that time, which isn’t factored into this pure stock price view. SNAP would get under $5 a share. I loaded up at around $6 and change and today have seen it double. It’s one of my most successful stocks.

I had personally already loaded up on Twitter stock at around $15. So while the price did get to around $47 and has been off of that for awhile, I am comfortable with it in the mid-30s.

Finally, I did buy Chipotle almost as soon as I published the article and sold it when it doubled. I never bought Under Armour, but thought about it as it went very low before doubling to today’s stock price.

With a total performance of around a 57% gain over nearly two years (plus dividends), I feel like these calls would have worked out well.

Sky-high Market? Seven Value Stocks to Consider

This was a fun article, because it was nearly exactly 1 year ago on June 10th. I started it off by explaining it was our “summer hole”, which is the time when the kids get out of school, but camp hasn’t started. That gap is getting easier to manage as the kids get more self-sufficient at ages 5 and 6, but it was tough when they were very little.

For this article, I was looking at a stock market that had reached new highs. I was concerned that valuations were just out of control. Some of these valuations came from big tech stocks. I thought it might be safer to move to old school stocks with a solid history of paying big dividends. There was no expectation of hitting a big home run here, because these consumer staple stocks aren’t likely to experience incredible growth.

The stocks I considered a year ago were: GE, Colgate-Palmolive, Johnson & Johnson, Proctor and Gamble, IBM (again), AT&T, and Disney. Here’s a look at how they performed if you invested $1,000 in each. Remember that these are mostly big dividend paying stocks and those aren’t included in this simple formula*.

In the last year, the S&P 500 has returned 1.73%, so 11.5% returns plus dividends is much better than I expected.

The only stock you really wanted to avoid on this list was GE. Guess which stock I bought the most of? GE! What buzzard’s luck! Due to some dollar cost averaging, I’m not down that much, but they also cut their dividend to a penny.

I also bought Proctor and Gamble, but I ended up selling it after it went up around 15% or 20% soon after I bought it. Since I invest in retirement accounts, I don’t care to hold for long-term capital gains. I also still hold IBM, which just keeps paying that dividend.

I’m most surprised by Johnson and Johnson being up over the last year. I thought the lawsuits from the baby powder buried them.

I’m kicking myself for missing out on investing on Disney. I mentioned a year ago that their Disney+ service is going to be big. However, I got wrapped up their mess of an ESPN division. I also didn’t have cash on the sidelines and didn’t feel strongly about selling other investments to buy into Disney.

Lessons to take away from stock picking

It’s difficult for me to reconcile stock picking. On one hand, I know it is better to index. On the other hand, it seems like I generally do pretty well. I’m not sure this is enough of a sample size to say that for sure though.

Also, I know that I sell my winners early, so even though P&G might be up 44% above, it wouldn’t have been that way for me. At the same time, I have loss aversion, so I continue to cling on to GE hoping that some day it will return my love.

I’d like to hear from you in the comments. Does this review of all (good and bad) the stock picks over the last couple of years convince you? Did I maybe get lucky?

* Maybe someone can suggest a better tool that includes dividends in the comments?

A few weeks ago, I wrote Why You SHOULD Try to Time the Market. It’s a very contrarian view because the math shows you’ll still make money if you stay in the market long enough. However, I wasn’t advocating exiting the market. Instead I suggested that you rebalance your portfolio by looking at cheaper international and emerging markets, increasing your bond allocation, and perhaps even holding a little more cash (which may require exiting the market to very, very small degree.)

The main reason why I think one should consider exiting the market is because the Shiller P/E is historically high… so high that a historic crash came in the next couple of years.

I like to take a small part of my portfolio and pick individual stocks. I know that the math says that indexing does better over the long haul. Here’s are some reasons why I think it is okay to pick stocks:

1. It is a very, very small part… so small that if all my stocks went to zero it would be fine. I wouldn’t be happy, but it wouldn’t fundamentally change our lifestyle.
2. It gives me some feeling of control over my investments. The S&P 500 is going to do what it does. Even these companies will do what they do, but buying an asset low and selling it high has never failed for me ;-).
3. By playing in my own little small sandbox, I’m not tempted to touch the big parts of my portfolio that would be life changing to lose.

And sometimes, you can Get Free Stock from Robinhood. In fact, I got a free share of stock of one of the companies that I’m going to write about today.

So let’s dig in:

Five “Bargain” Stocks to Consider Buying Now

Before I get started, I want to put some disclosures out there. I’m not writing about these in any particular order. When I actually own a stock, I will disclose it. I may consider buying these in the next 72 hours, but I would likely invest less than $3000 total and these are big billion dollar companies. My readership is not large enough to impact the stock price of these companies. Prices of the stocks are of accurate as of around midday of 8/22/2017.

Under Armour Inc (NYSE:UAA) – Price: $16.68

Why it’s Cheap

I’ll be open, I haven’t really studied the company in great depth. I noticed a few big drops from what appear to be earnings misses and lowering guidance. It’s no secret that retail sales are terrible. Malls aren’t what they used to be. Blame Amazon or consumers finally figuring out you shouldn’t pay for fashion. It’s not just Under Armour as FootLocker got hit hard last week for poor sales. Since FootLocker sells Under Armour, it’s not a great sign that Under Armour is turning it around.

Why I like it

In April, 2016 Under Armour traded at $80 a share. In 2015, it was $100 a share. Would you rather pay around $17, $80, or $100 for a share of a company? At $17 it is a $7 billion company. Some people thought it was a good idea to invest in it when it was a $40 billion company.

This is a chance to get a great brand that has already been punished. In a world of very, very high valuations that may be due for a crash, I’ll take the brand that has already crashed as it doesn’t have as far to fall.

IBM (NYSE:IBM) – Price: $140.50

Why it’s Cheap

IBM has been selling off its hardware businesses for years and investing in software. It’s been a long process since it is a big company. They are competing in the cloud/services/AI space with other big companies like Google, Amazon, and Microsoft.

The long transition has meant that revenues haven’t been growing. In fact, they’ve been shrinking every quarter for years.

Why I like it

At a 11.67 price/earnings ratio it’s a very cheap tech company. The dividend yield is a very high 4.27%. The rest of the market could crash by 50% and IBM would still look like it’s valued cheap. In the meantime, why not enjoy the 4% dividends? By the way, I do own IBM and I have owned it for years.

Chipotle Mexican Grill (NYSE:CMG) – Price: $307

Why it’s Cheap

If you’ve been following the news over the last couple of years, you’ve heard about the health violationns at some of its restuarants. It’s at the point where a hint of a health problem seems to cause shockwaves in the stock.

Why I like it

I like for the same reasons that I liked Under Armour. It was $725 in late 2015. I thought that it was worth buying at $368. After I wrote that article it went up to around $490 earlier this year. That would have been a nice gain in just a few months, right?

Now everyone has another chance, but this time it’s only $307. In some ways, it is also the opposite of Under Armour. I love the Under Armour brand, but don’t like the retail industry. I love the fast casual dining restaurant business at certain valuations, but Chipotle needs to work on its brand.

Finally, the company is worth around $8.7 billion dollars while the valuation was $20 billion not too long ago. Like the general theme here, I think it is more likely they’ll go up from here and drop minimally if there is a market crash.

Update: While I wrote this article on the 22nd for publishing on the 24th, I decided to buy 6 (yes six!) shares of CMG at nearly exactly $300 as it continued to drop on the 23rd.

Snap (NYSE:SNAP) – Price $14.00

Why it’s Cheap

It was around $11.50 when I had the idea to write this article. It’s now already recovered to $14. So it’s not as cheap. However, it’s still less than half of its IPO price. That IPO price might have been inflated, but this is a chance to buy Snapchat almost as cheap as anyone has been able to.

Why I like it

I’m not sure that I do. I’m not a Snapchat user, and I don’t really feel like I grasp the business model. I do own a single share of this company via the Robinhood promotion that I mentioned above.

I suppose one reason to like it is that it seems that teenagers are moving from Facebook to Snapchat. That’s not enough for me to make the move without knowing more about it.

Instead I’d rather own…

Twitter (NYSE:TWTR) – Price $16.89

Why it’s Cheap

Lack of user growth. Analysts want to see Twitter compete with Facebook and it just isn’t happening. They also see that Google and Facebook are getting the vast bulk of online advertising dollars. Twitter is fighting for the scraps. (I shudder to think where that puts me!)

Why I like it

It’s hard to find household tech company names that are worth around $12 billion dollars. There’s a lot of free advertisement from The President of the United States to celebrities. Even TV shows use hashtags. The company has a TON of spare cash and I think they could cut the costs of operations significantly (unlike Netflix, they don’t need to license/create content).

Summing it up

At the end of the day, there’s a reason why all these stocks are well off their highs. Most of these companies have seen their profits drop. Others haven’t been executing. That’s why I put “Bargain” in quotes in the title. I’ve always been a fan of buying low, holding, and selling higher.

Of course there’s always a danger that the companies could go lower. However, in what seems to be an overprice market, I think they less room to fall.