Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Stock Madness 2006: Winning With Balance

The following article is part of The Motley Fool's "Stock Madness 2006," based loosely on the annual NCAA College Basketball Tournament, a.k.a. "March Madness." Throughout the competition, our writers and analysts will engage in head-to-head competition. You, dear readers, are the fans and referees -- after you read these exciting duels, your votes will determine who moves on to the next round of play. The writer who survives the tournament will be our champion and most valuable "coach."

But please, make no mistake -- "Stock Madness 2006" is a GAME!

Years ago, I coached basketball. My job as an assistant for a high school girls' team was to help my boss build a winner. It was his system; I was along for the ride.

But I learned a lot, and many of the lessons have stayed with me. Here's one: Balance wins. Or, in investing terms: A balanced portfolio beats both all-value and all-growth. In that sense, my team, an opportunistic squad that couples a pair of long-range shooters with three big guys capable of wiping the boards clean, matches up well with Rick Munarriz's three-point bombers that depend solely on getting, and staying, hot. My lineup consists of Chattem (Nasdaq: CHTT  ) , Embraer (NYSE: ERJ  ) , iRobot (Nasdaq: IRBT  ) , Oracle (Nasdaq: ORCL  ) , and Taiwan Semiconductor (NYSE: TSM  ) . Let's take a closer look at their performance.


Market Cap






Consumer staples













Taiwan Semiconductor




Certainly, there's a case to be made for Rick's squad. I've been a contributing analyst to Rule Breakers, and I understand that stocks like CNET can get hot. But so, too, can they go cold, as has former top scorer Baidu. The team suffers when that happens.

Conversely, I build around firms at the center of tectonic shifts in industries that are desperately in need of shaking up. But they needn't be first movers, or small, or even known, as would classic Rule Breakers. All I require is that they have an excellent chance to claim an outsized share of a multibillion-dollar opportunity. Let's focus on my shooting forward for this contest -- Embraer -- to illustrate what I mean.

Embraer is a Brazilian maker of regional jets. Its primary competitor, Bombardier, has gone weak while United Airlines has begun profitable experiments using Embraer jetliners over longer routes. JetBlue (Nasdaq: JBLU  ) and US Airways are also in on the game, signaling what could be a multibillion-dollar fleet makeover aimed at boosting the bottom line. What's more, the company is valued at less than its peers, including Boeing (NYSE: BA  ) , while sporting better returns on assets and equity.

I take the threat from Rick's shooters seriously. But, in staying behind the arc, I know they're going to miss a lot. My big men won't give them second shots. And on offense, we're going to work the ball inside, spot up for a few threes, and get our dunks in transition while we make Rick's Breakers spread the floor. It's a formula that's worked for decades in college hoops. There's no reason it shouldn't work here, too.

Rick Munarriz's rebuttal
Tim argues that the key to coaching is balance. I'll take my shooters over his team's balance any day. He's got a personality-driven software company in Oracle that has suckered investors into overpaying for vanity acquisitions. He's got a jet maker whose most prolific customer -- JetBlue -- is now in the red.

He also has Chattem, the maker of Aspercreme and Gold Bond medicated powder. If it hurts -- if it itches -- it may be infected like Tim's squad. Aim higher, folks. At the very least, aim for the basket.

JetBlue is aMotley Fool Stock Advisorrecommendation. CNET and iRobot areMotley Fool Rule Breakerspicks.

Will Tim's team take down Rick's squad? It's your call. Check out Rick's lineup, and thencast your vote.

Fool contributorTim Beyersowns shares of Oracle.Fool contributorRick Munarrizowns no shares of companies mentioned in this story.The Motley Fool has adisclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 512387, ~/Articles/ArticleHandler.aspx, 10/25/2016 6:27:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:01 PM
BA $137.45 Up +1.82 +1.34%
Boeing CAPS Rating: ****
CHTT.DL $0.00 Down +0.00 +0.00%
Chattem, Inc. CAPS Rating: ****
ERJ $19.93 Up +0.09 +0.45%
Embraer-Empresa Br… CAPS Rating: *****
IRBT $44.52 Down -0.12 -0.27%
iRobot CAPS Rating: *****
JBLU $18.75 Up +0.18 +0.97%
JetBlue Airways CAPS Rating: ****
ORCL $38.27 Up +0.34 +0.90%
Oracle CAPS Rating: ****
TSM $31.41 Up +0.33 +1.06%
Taiwan Semiconduct… CAPS Rating: ****