Top Gun’s 3Q Stock Picks Handily Beat S&P 500

Its time to take stock of this quarter’s stock picks.  9 of 10 of Top Gun’s picks are up from their recommendation date, and the 10 are up an average of 7.30% compared with a 3.51% average for the S&P 500 over the same periods. 

Stock         Rec Date Price on Rec Date Current Price %Change S&P 500%Ch.

PG&E (PCG)   Mon 7/24, BO       $40.62         $41.65         2.54%          7.70%

Netflix (NFLX) Tue 7/25, AC        $18.78         $22.78        21.30%         5.28%

Whole Foods (WFMI) Mon 7/31, AC $51.54      $59.43       15.31%       4.64%

Cisco (CSCO)    Wed 8/9, AC         $19.78      $22.98        16.18%        5.52%

Lockheed Martin (LMT) Tue 8/29, AC $83.08  $86.06         3.59%         2.42%

General Dynamics (GD) Tue 8/29, AC $67.99 $71.67         5.41%         2.42%

Valero (VLO)     Thu 9/7, 2:30 EST   $53.50    $51.47       -3.79%          3.07%

DirectTV (DTV)  Thu 9/21, AC          $18.91     $19.68        4.07%         1.35%

Dish Network (DISH) Thu 9/21, AC   $31.61     $32.74        3.57%        1.35%

Comcast (CMCSA) Thu 9/21, AC     $35.20       $36.90        4.83%         1.35%

                                                                   Average          7.30%         3.51%

                                                                   Average (7)    8.65%         4.44%

BO = Before Open, AC = After Close

Average (7) excludes CMCSA, DTV and DISH because they only traded for 6 days after I recommended them.

PG&E – I am becoming increasingly annoyed with PG&E.  In addition to their stupid commericals about saving energy they have now decided to provide a credit for the July heat wave.  Because it was so hot people used alot more electricity and therefore their bills were higher.  Duh!!  But for some reason PG&E feels the need to give some of this money back:

Pacific Gas and Electric Co. will provide a one time credit to electricity customers to reduce the effects of the July heat wave on their power bills.

The relief measure will be equal to 15 percent of the bill that includes the July ‘heat storm’ for residential customers and 10 percent for business, agricultural and other customers.

The heat wave drove up PG&E residential electrical consumption by an average of 28 percent from June to July…. PG&E estimated the value of the credit at $125 million to $150 million. 

They also reported what I thought was a pretty poor second quarter.  Let’s wait to see what they report for the 3rd quarter.  At that point, I’ll make a decision whether to hold or sell – as I’m not that happy with the company right now.  I think that the problem could be the regulatory environment for utilities in CA.  One good thing is the 33 cent dividend that they will be paying in a couple weeks. 

Other – Other than PG&E’s disappointing performance I am pleased with the performance of the recommendations. 

Whole Foods, Netflix and Cisco all reported greater than 15% returns in the time that I recommended them.

Most of these stocks are well positioned for what I see as a coming harder than expected landing.  PG&E and the three cable and internet picks (Comcast, DirectTV, and Dish Network) are good defensive stocks, as are grocer Whole Foods and gasoline refiner ValeroLockheed Martin and General Dynamics are affected by the geopolitical situation, not so much the economy – and that looks, uhhh, bullish. 

The two stocks that don’t fit easily into this macro view are Netflix and Cisco.  But I like them for different reasons.  I like Cisco because of the ongoing network build out as more and more people swith to broadband internet and the cable companies try to supply the “triple play”: cable, internet and telephone.  And Netflix I like because it is a great company and it has cheap enough subscription plans that I think they can continue to grow into a tough economic environment. 

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