Portfolio Highlight: TJX

Adding to my Consumer / Service holdings I picked up The TJX Companies (TJX) because of its consistent performance over the past 10 years and growth potential with the HomeGoods stores and expansion in Europe.

When looking at the balance sheets for the past 5 years I saw operating margins consistently over 10%, EPS growth of at least 15%, growing working capital, ROA over 15% with ROE between 40%-50% and low debt. In comparison with the other stocks I was evaluating, Estee Lauder (EL) had a higher P/E and Home Depot (HD) had lower operating margins so those remain on my watchlist.

In every investment book I've read they always say you can never "time" the market and this is one case where it hurts to follow that advice. I bought a few days before the earnings report around 58. Based on today's conference call sales were flat but they aren't changing their targets for next quarter so I'll await the next report before increasing my position.

Portoflio Highlight: RDC

My purchase of Rowan Companies (RDC) is a direct result of what I've learned from reading "The Intelligent Investor."

Originally I was following Schlumberger (SLB) because that's one of the most popular names in oil equipment. It had a relatively good P/E of under 20 and the call transcript didn't mention any major problems with future earnings. But when I compare the P/B values SLB has a book value of $30.72 per share while costing about $100. RDC has a book value of $39.86 while the stock trades at around $30.

Why the difference? For one there is fear in the offshore drillers right now because of a push for reduced day rates on rigs so all companies are trading lower. Second, Rowan is a major player in shallow water drilling and just sold off their land based business to focus on deepwater rigs which is where the big money is. Their first rig is built (so they've proven they can actually build deepwater rigs) and being deployed so this would be play on their future growth and with the stock being priced at below book value it has the largest amount to gain.

Where Have I Been?

As usual priorities changed and I wasn't paying much attention to the stock market but with a recent infusion of cash I'm ready to get back to investing. Hopefully longer term and with more knowledge now that I've finished reading "The Intelligent Investor." My strategy is also changing as I'm going to take a harder look at picking value stocks over "high flyers" and avoid the financial sector for now.