5 Buy-and-Hold Picks for 2013 — and for Charity

by Jeff Reeves | December 28, 2012 10:29 am

I am competing in a stock-picking competition this year sponsored by Portfolios with Purpose[1] — an organization dedicated to bringing the honorable mission of charitable giving together with the fun of investing.

The rules are simple: Register and donate to PwP (as little as $100), build your portfolio of five stocks (you can be long or short) to hold for a calendar year without trading, then pick your favorite charity you will be playing for.

Founder Stacey Asher worked in the hedge fund industry for about seven years before creating the site after seeing the number of people in the financial industry who support causes bigger than themselves. And this idea seemed like the perfect way to marry a good cause with the fun and excitement of investing.

Here’s why I’m playing — and for those of you interested, the five stocks I’ll be holding for the contest and why I chose them.

My Charity

I’m playing for the Rape, Abuse & Incest National Network, known by its acronym RAINN.

I am the father of two beautiful children, and like many parents I agonize over how to keep them safe. Simply thinking about how their lives — and mine — would be forever changed by sexual violence makes my skin crawl; I cannot even begin to imagine the horror of living through something like that.

But sadly, the odds of knowing someone who has been a victim of rape are staggeringly high. Every 2 minutes someone in the U.S. is sexually assaulted. And if this number surprises you, that’s because over half of sexual assaults are never reported to the police — and many are never spoken of, even to friends and family.

That’s why we desperately need a group like RAINN, with brave and compassionate people who help victims of rape (and their families) find their voice. RAINN gives hope to the men, women, boys and girls who become victims of rape, but also pushes for policy changes, and sponsors education and prevention to prevent violence from occurring in the first place.

Aside from this worthy mission, RAINN also regularly ranks among the best charities in the country with the vast majority of its funds going to programs … instead of administrative salaries and other expenses that don’t actually change lives. RAINN is a worthy organization — both in its mission, and in its leadership.

Learn more about RAINN here on their official website[2].

My Stocks

I’ve picked five stocks for this contest: Intel (NASDAQ:INTC[3]), Transocean (NYSE:RIG[4]), Southern Copper (NYSE:SCCO[5]), JCPenney (NYSE:JCP[6]) and Hewlett-Packard (NYSE:HPQ[7]).

Intel: I’ve written on Intel[8] in the past, and in fact have my own money in the stock. My reasons include a +4% dividend, scale as the No. 1 semiconductor manufacturer on the planet and hopes that they will evolve into the mobile space next year.

Transocean: I like cyclical stocks for 2013. After a lackluster start to the year thanks to continued earnings trouble, we could see a secular recovery take shape in the second half. Add the threat of a weaker dollar and you get higher crude oil prices and a boon for the energy sector. Transocean is the largest deepwater driller out there, and with the prospect of some stability now that loose ends from the BP (NYSE:BP[9]) mess are being tied up, we could see a reinstated dividend and some nice growth in 2013.

Southern Copper: Another cyclical stock, Southern Copper has been eviscerated by weak copper prices recently. But a rebound may be in store should industrial demand pick up — particularly from housing, where we’ve seen signs of life in 2012. Copper is used in pipes, wiring and a host of other applications, so an economic recovery means a recovery for copper prices … and SCCO stock, too.

J.C. Penney: Could Ron Johnson have done a worse job in 2012? Probably not — and I named him one of the worst CEOs of the year[10]. However, now that JCP has obliterated its same store sales, it could have nowhere to go but up. Johnson doesn’t have all bad ideas, and some of his ways to rejuvenate the retailer may yield results in 2013 — most notably by streamlining operations and cutting costs now that the dividend is suspended. I don’t expect JCP to ever return to greatness, but I do expect it to bounce back. And besides, you sometimes don’t win a contest like this wholly on serious picks like Intel … it’s the long shots that are big risk and big reward that can put you over the top. JCP is too aggressive a turnaround for my real-life portfolio, but suits me just fine when I’m using play money.

Hewlett-Packard: JCP is a golden child compared with the dumpster fire at H-P. I have been bearish on Hewlett-Packard all the way down, most recently in October after a botched analyst presentation[11], and most presciently in August 2011 when I warned a crash was coming thanks to the fact that H-P embodies all that is wrong with Corporate America[12]. But despite all this, it’s hard to imagine H-P going under anytime soon — so like J.C. Penney, I’m taking a flyer on this Dog of the Dow and hoping for a turnaround in 2013. HPQ stock eventually will become a true value buy instead of a value trap … and a forward P/E of just 4.0 right now tells me the turning point could be in 2013.

How to Play

I encourage everyone to consider playing the Portfolio with Purpose stock-picking game[13] for your favorite charity in 2013. For just $100 you can enter — and if you win your class, your charity of choice could see a big windfall. The top three winners from each experience level will split the entire pot of donations: 60% to the winner, 30% to second place, and 10% to third place.

Visit PortfolioswithPurpose.org for details, or write info@portfolioswithpurpose.org[14] for more information. But act fast, because the contest is about to start with the New Year!

Jeff Reeves[15] is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[16] Write him at editor@investorplace.com[17] or follow him on Twitter via @JeffReevesIP[18]. As of this writing, he held a position in Intel but none of the other stocks named here.

Endnotes:
  1. Portfolios with Purpose: https://www.portfolioswithpurpose.org/index.php
  2. Learn more about RAINN here on their official website: http://rainn.org/
  3. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  4. RIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIG
  5. SCCO: http://studio-5.financialcontent.com/investplace/quote?Symbol=SCCO
  6. JCP: http://studio-5.financialcontent.com/investplace/quote?Symbol=JCP
  7. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ
  8. I’ve written on Intel: http://slant.investorplace.com/2012/10/why-i-just-bought-intel-stock-and-why-you-should-too/
  9. BP: http://studio-5.financialcontent.com/investplace/quote?Symbol=BP
  10. worst CEOs of the year: http://slant.investorplace.com/2012/12/the-3-worst-ceos-of-2012/
  11. botched analyst presentation: http://slant.investorplace.com/2012/10/meg-whitman-hp-ceo-analyst-speech-hpq-stock/
  12. all that is wrong with Corporate America: http://investorplace.com/2011/08/hewlett-packard-hp-stock-buyback-autonomy-buyout-hpq/
  13. the Portfolio with Purpose stock-picking game: https://www.portfolioswithpurpose.org/index.php
  14. info@portfolioswithpurpose.org: mailto:info@portfolioswithpurpose.org
  15. Jeff Reeves: http://slant.investorplace.com/author/profile/jeff-reeves/
  16. “The Frugal Investor’s Guide to Finding Great Stocks.”: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb
  17. editor@investorplace.com: mailto:editor@investorplace.com
  18. @JeffReevesIP: http://twitter.com/JeffReevesIP

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