The Monthly Stock for March 2009

Just a quick post to let you  know I'm updating the Monthly Stock Portfolio with this month's stock pick.  As I've mentioned in the past, I'm not crazy about this portfolio anymore.  I set it up to instill a little discipline into what had become what I considered too much trading.  What I have discovered is that the criteria I set to limit trading has become a detriment to my ability to make smart informed trades.  Despite the lackluster performance, I will continue these picks for at least the rest of this year.  At the end of 2009, I will make an assessment, and I may start a new Monthly Stock Portfolio from scratch.  What I'd like to do is a Monthly Theme, similar to the Themes you see in the Aggressive Trader Portfolio.  But until then...

As of tomorrow's open, we are dropping Hercules Offshore (HERO) and adding Excel Maritime Carriers, Ltd. (EXM).  Despite HERO's awful 95% plunge since it was first recommended, I am not crazy about offloading this stock at this point.  But according to my sell criteria, HERO must go.

EXM is in another scary sector, dry bulk shipping.  These stocks were flying high in 2008, as commodity prices soared and shipping rates peaked.  But in late July, deflation set in and commodity prices pulled back, as did shipping rates, and profits for the shippers.  So why a shipper in this deflationary climate?  Given the criteria set forth for this portfolio, I know that this stock will be held for at least a year.  I'm not sure the deflationary cycle will be over in a year, but I do know that the shippers will not go away.  Some of them may be gobbled up by others, but the shipping industry cannot just vanish.  Global trade will happen, and picking up a shipper at these prices may be a nice move for this portfolio going forward.

With that said, here are some of EXM's fundamentals:

PEG Ratio = 0.03 (Miniscule)

Estimated Sales Growth Nxt Qtr = 117%

ROE =  37%

ROA = 10%

Insider Ownership = 4%

To recap, at tomorrow's opening price, the following moves will be made for The Monthly Stock Portfolio:

SELL HERO

BUY EXM