Investment Club YenoM had an excellent meeting on May 17, 2010 with six members in attendance. Carl presented a new stock to the club, U. S. Ecology (ECOL). The company is one of the older firms that recycles of hazardous material (radioactive, polychlorinated biphenyls, etc) and not-hazardous industrial waste. It services both commercial and governmental entities.
Number of Stocks: 14 (goal is 16 plus or minus 4)
Company Size: Large, Mid and Small are all out of tolerance. We need less large and more mid and small.
Sectors: All in tolerance except for Technology. We need less technology
Individual Stock Percentage: One stock, SunPower (SPWRA) is too low. That means we need to sell or add more. This is the first time since we've adopted this methodology that an individual stock is out of tolerance.
Percent Annual Return: in the sweet spot but on the low side
Quality: Good
Growth: in tolerance but on the low side
Individual Stocks analysis: Two stocks are of concern.
Sun Power due to low position and a very low quality rating and Hornbeck Offshore Services (HOS) due to a negative PAR and slightly low quality rating.
Our intent this month was to increase PAR and Growth while improving Mid and Small company size.
DECISION: Sell all of Sun Power (SPWRA) and use the funds plus available cash to purchase U. S. Ecology. Reasoning: Sun Power is not a quality company (based upon Manifest Investing) and the news seems to indicate that their product is not cutting edge. Their growth rate is around 6% which seems low for a company of this nature. U. S. Ecology's PAR is in the upper portion of the sweet spot, is a quality company with better growth prospects than Sun Power. So these decisions had the impact of improving overall growth potential and replaces a stock that we had lost our confidence in.
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