note: This post is a follow up to the New Year post: Four Stocks for the New Year

Its amazing how much can change in just one quarter (especially a quarter like Q1 2009).  When this friendly competition began, markets looked as if they might be recovering from the worst of the financial crisis – we were actually at least two months away from that bottom.  The country had a newly elected administration with high hopes for a new direction.  That new direction has since taken many twists and turns and has at times been quite frightening.

It’s a very good thing that true investment accounts are able to adjust to changing dynamics.  While the four picks I chose at the beginning of the year are now down a collective 24.19%, the ZachStocks Growth Model is actually within a percentage point of the overall market after rebounding from a low that was significantly better off than the low of the market.  (I’d rather miss a bit of the rebound in return for keeping some risk off the table at the low point).

So without further introduction, here are some comments for the four ill-fated positions as well as links to the other far superior contestants…

1. JA Solar Holdings (JASO)
   The excitement surrounding solar as a priority for the new administration has been largely overwhelmed by illiquidity in the credit markets, lower traditional energy prices, and an administration that has needed to spend more energy (and capital) on other more pressing issues.  The environment has simply been hostile for these companies, and in the short-term challenges look very menacing.  However, new stimulus news out of China in recent days has the sector improving and I still believe there is value for solar investors.  Picks that I am more excited about include LDK Solar (LDK) as well as First Solar (FSLR) but JA Solar should still benefit from these trends.
2. AECOM Technology Corporation (ACM)
   Infrastructure was another area that showed promise at the beginning of the year.  Much had been made about Obama’s promise of millions of new jobs created in order to restore America’s aging roads, bridges, federal buildings and more.  AECOM is in the sweet spot of having global diversification, but still having enough exposure to the US to make a difference.  The stock dropped sharply as fast traders bailed when the market was initially weak.  But as prices firm and actual stimulus capital is put to work, AECOM is rebounding and should still perform nicely.  Other names to look at in this sector include Hill International which also provides construction claim and litigation services.
3. TBS International (TBSI)
   It is quite disappointing to see just how weak the shipping companies have been this year.  In late March, the ZachStocks Growth Model threw in the towel on a few of these positions.  (Obviously an argument could be made that we were a month and a half too late – if not more).  The global slowdown in trade has been sobering and there is not much in the way of encouraging signs for this group.  While some companies operate on long-term charter contracts, there is still counter-party risk as the purchaser may choose to break the contract.  In short, there is not much redeemable about this sector and my inclination is to find more attractive investments elsewhere.
4. China Medical Technologies (CMED)
   The stock price for China Med has been extremely disappointing.  However, the business fundamentals of the company are actually still quite sound.  CMED is expected to earn $1.88 this year and $2.08 next year which means that at $13.77 the stock is just over 7 times earnings.  While the growth trajectory may not be quite as robust as analysts expected a few months ago, the strong recurring revenue flow and attractive product line seems to be worth more than the market is pricing.  The company remains a position in the ZachStocks Growth Model and should show relative strength through the rest of the year.

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So there you have it.  And speaking of the growth model, I have arranged a free one month trial.  This limited time offer allows you to take advantage of the diversified (and flexible) approach to growth stock investing and is easily implemented in your own brokerage account or retirement account.  Why not check it out?  Feel free to read about the model using the link above, but for the free trial, use the sign up button to the right.  This offer will only be available for a select number of subscriptions so act now!

And now to take a look at the competition.  The links below (in no particular order) lead to the other participants in the 2009 stock selection contest:

Intelligent Speculator

The Wild Investor

My Traders Journal

Four Pillars

Where Does All My Money Go?

Dividend Growth Investor

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