It is the end of the year, so I reapplied the "Stock Trading Riches" formula to all my stock holdings - and adjusted the positions (by buying and selling shares) accordingly.
Since my portfolio is up about 22%, after being up 44% last year, the rebalancing of the individual positions resulted in the cash portion of my portfolio being over the maximum for the STR system.
I found that I needed to add 6 positions to my portfolio to put the excess cash back to work.
Here are the 6 positions I bought:
1. Hasbro (HAS) - Parents and grandparents who had to hold back on toy purchases during the recession want to buy things for their kids now that the economy is coming back. Hasbro has a large share of the toy market, and their Beyblades are a big hit. I bought it at $47.60, which is trading at about 14 times estimated 2011 earnings.
2. Jakks Pacific (JAKK) - This is also a toy company. Besides benefiting from the improving economy, they are at the bottom of their hit cycle. Hannah Montana dolls had pushed their stock from $18 to $30. Now, the dolls popularity peaked, and the stock is at $18.65, ready for the next craze.
3. GOL Airlines (GOL) - The only developed country airline I own is Southwest (LUV), but airlines in developing countries have growth potential. GOL is the new, low cost carrier in Brazil that has quickly captured 40% of Brazil's seat capacity. At $14.71, it is trading at 1.5 times book value, 80% of annual revenue, and six times estimated 2011 earnings.
4. Flsmidth and Co (FLIDY) - I usually don't buy pink sheet stocks, but I bought this stock at $9.31. This is a Danish company that provides engineering services to cement makers. They are really strong in emerging markets like India. The stock is trading at 2 times book and 11 times 2011 estimated earnings, and will participate in the materials comeback as the developing world resumes its growth.
5. Celanese (CE) - This is a play on the improving global economy because they make acetyl chemicals, and 3/4 of its revenues are from outside North America.
6. Diageo (DEO) - With funds focusing on emerging markets and Asia, UK multinationals like spirits maker Diageo are undervalued. At $74.22, I'm broadening my portfolio at a good price to include premium drinks such as Johnnie Walker, Jose Cuervo, Baileys, and Guinness. They also own 34% of Moet Hennesy (which owns luxury brands like Hennesy cognac).
