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My Charity Stock Portfolio: Q1 Update

Portfolios with Purpose is an annual investing competition where traders compete for their favorite charities. I think it’s a fun and worthy project for anyone involved with the market, as well as a chance for me to do what I like best: talking about stocks.

Here are my five picks — made Jan. 1 to buy and hold all year — and how they’ve performed:

Intel: +5% YTD vs. +10% for the S&P 500

Intel (NASDAQ:INTC) showed some promise to start the year, but Q4 earnings threw some investors for a loop. PC sales weighed on chip sales, of course, but there also were fears that the company was overextending itself with a big capital expenditure on manufacturing operations. INTC sold off sharply, and while it has fought back, it is still way behind the market year-to-date. Of course, in a 12-month contest like this, sometimes it pays to be relatively modest out of the gate rather than get hot too early. And if enterprise spending turns around and consumers get their swagger back in the second half of the year, INTC could see a nice run to close out 2013. In the meantime, that dividend of more than 4% ain’t bad, either.

Transocean: +14%

I remain rather bullish on cyclical businesses going into 2013 because I think that after a rough start to the year, there might be significant signs of improvement in the second half. Energy exploration stocks like Transocean (NYSE:RIG) will benefit from increased demand that would result from a resurgent economy and a bigger push for crude to feed our growth. Additionally, RIG could reinstate its dividend now that the BP mess is over. We just got the OK on a $1 billion settlement relating to the Deepwater Horizon disaster and BP (NYSE:BP) gulf oil spill, and that could provide stability for the stock going forward.

Southern Copper: -3%

I’m a sucker for cyclicals, and Southern Copper (NYSE:SCCO) is another on my list. Copper prices have remained soft thanks to big demand concerns out of China, but there is bullishness for base metal miners and related materials stocks if the U.S. recovery continues to gain momentum — particularly in housing, where copper wires and pipes could see strong demand. Of course, if the U.S. dollar continues to move higher, it will weigh on commodity prices — and if China continues to cast a pall on industrial demand, then SCCO could face headwinds for the rest of the year. But hey, at least this company has an annual yield of 2.6%.

JCPenney: -24%

Well, in my original pitch for JCPenney (NYSE:JCP), I warned that “It stinks right now, but 12 months is a long time for things to break JCP’s way. An executive shakeup or big-time restructuring coupled with simply stopping the bleeding could help shares move higher.” Unfortunately, the shake-ups continue to be negative, with a staggering third marketing exec heading for the exit in just 10 months. The fundamentals haven’t turned around yet, so it’s dangerous to call a bottom in JCP stock … but hey, it’s just paper trading! A long-shot recovery play is fun to monkey with in a stock-picking game like this, even though investing actual money in this stock is wildly speculative and risky right now.

Hewlett-Packard: +64%

Remember what I said about wildly speculative investment? That applies to Hewlett-Packard (NYSE:HPQ), too — even though HP has managed to post a stunning gain so far in 2013 that is six times the broader market’s return.

Investing real money in HP stock a few months ago would have given me an ulcer, but I thought CEO Meg Whitman had ridden the stock as low as it could go. Issues included restructuring pains, the weight of a post-PC age and general mismanagement by her predecessors over the previous several years … but seemed pretty much priced in after shares went from over $50 in 2010 to under $12 a few months ago. Whether HP is in the middle of a lasting turnaround or just a brief uptick in stock price is anyone’s guess … but I’ll take the profits so far in 2013.

My total return is about the same as the market in 2013 — just shy of 11% — which puts me in 27th place for the Professional Class. Frontrunner Bryan Rush has 50% returns, but to get on the leaderboard at No. 5 I need a more manageable target of about 25%. Here’s hoping the next three quarters are better for my picks — and for my charity, the Rape, Abuse & Incest National Network (RAINN).

I encourage you to check out Portfolios with Purpose and sign up for its mailing list for alerts about this contest and its next charity competition. It’s fun and for a worthy cause.

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. Some of the high-profile experts playing this year include short-selling king David Einhorn of Greenlight Capital and Daniel Loeb of Third Point.

And if you’re in the NYC area April 3, consider dropping by the Ana Tzarev Gallery on West 57th for charity event to benefit the organization, headlined by the  Leon Cooperman, chairman and CEO of Omega Advisors. (Event details here)

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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