2 Winners to Watch, and One to Buy Right Now

Everyone talks about the growth of the healthy lifestyle, but investing in people's commitment to get out and active is a sucker's bet. Million Dollar Portfolio associate advisor Charly Travers has his eye -- perhaps unintentionally -- on three companies that will capitalize on Americans' inertia. He claims he was just scouring for great businesses, but you have to admit that there's something to a sloth portfolio.

One to watch
A key ingredient to many a lazy night or a Sunday on the couch is our good friend Sam Adams, brought you by Boston Beer (NYSE: SAM  ) . Stunningly finding itself as the largest American-owned brewer, now that the industry's stalwarts have succumbed to foreign ownership, Boston Beer is still chaired by visionary leader Jim Koch, who maintains ownership of one-third of the company.

"Before the microbrew revolution, you would've been crazy to go against Anheuser-Busch InBev (NYSE: BUD  ) and all the other watery-beer companies," Charly points out. "They had an unassailable position, but Sam had a simple strategy: Make a better product. It's a great story."

The share price has been strong in recent months, leading Charly to watch it instead of making it a buy. But our CAPS investment community remains bullish by a large margin: 1,185 members (including all five Wall Street analysts who have rated the stock) expect the company to outperform, while only 54 members rated it to underperform. Charly's watching.

Two to watch
Running out of Sam Adams is the couch potato's crisis. By stocking your fridge with vast quantities of food, drink, and other household goods from a place that sells canned pineapple by the pallet, you can reduce your total time away from the couch on shopping trips. That's part of the magic of BJ's Wholesale Club (NYSE: BJ  ) , the smallest of the three major wholesale club operators. The other part of the magic, at least from the investor's perspective, is the recurring revenue inherent in its business model. Located primarily along the East Coast, BJ's charges users an annual membership fee in exchange for low-cost stuff, and the company boasts enviable renewal rates.

But BJ's is the subject of private equity takeout rumors. Leonard Green & Partners bought nearly 10% of the company's stock last summer, sending shares upwards. Management resisted the push to take the company private, but it remains a hot topic. Charly says this is an either/or situation: Either the company goes private, and shareholders get a premium, or management continues to fend off privatization, and the stock pulls back. Charly's keeping an eye on the situation for hints.

One to buy right now
No sedentary American's life is complete without the latest video games, which leads us to Activision Blizzard (Nasdaq: ATVI  ) . The industry-leading maker of some of the most popular videogames saw its share price plummet on what Charly refers to as a superficially bad earnings report.

"Today, more money is spent on videogames than on movies, and Activision is the top dog. It's a lumpy business -- some years you'll have big hits, and some years you run dry," Charly says. "When you have the off years, the market gets grumpy, and that's what's happening now. But it didn't suddenly become a bad company -- i t's still a great company that just happens to be selling at a discount."

Charly's not going to miss on this one; he's had experience in letting an opportunity from his watchlist slip through his fingers, and he's not planning a repeat. He followed laser-maker IPG Photonics (Nasdaq: IPGP  ) intently for nearly four years. When the company bottomed out two years ago, Charly knew the company cold and understood that it was a great time to buy. But he froze. For reasons that now seem fuzzy, he never got around to making a purchase, and he watched as the company climbed more than sevenfold in the ensuing two years.

"I learned a painful lesson. It's far more costly to miss a big gainer than to have one you own drop 50%," he says ruefully. "The most you can ever lose is 100% of your investment, but you can earn far more than that if you find a great company at a great price." And that's why, despite today's focus on the more passive lifestyle, Charly's anything but inert when it comes to great investment ideas. He keeps an active watchlist and acts when the time is right. Start yours today at the Fool's free MyWatchlist.com.

Looking for more ideas? If you want six more great stocks that David and Tom Gardner think you should watch, sign up for MyWatchlist today, and you'll have immediate access to our free report, "6 Stocks to Watch From David and Tom Gardner." It's waiting for you when you begin building your own watchlist. Click here to get started now.

Roger Friedman owns none of the companies above and tries to avoid the sedentary lifestyle, but he admits he finds Sam Adams tasty. IPG Photonics is a Motley Fool Rule Breakers pick. Activision Blizzard and Boston Beer are Motley Fool Stock Advisor choices. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. The Fool owns shares of Activision Blizzard and IPG Photonics. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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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.

  • Report this Comment On February 17, 2011, at 4:53 PM, locololo2 wrote:

    What would it take to get this stock finally moving?

    Analysts are slowly starting to pay it a bit of attention, but what else?

  • Report this Comment On February 18, 2011, at 9:29 AM, BioBat wrote:

    It's not seeing any move because analysts and money managers are only paying attention to NPD sales figures, which only account for physical media sales and those are declining. All it's going to take is someone to start accurately reporting digital media sales and it will become a whole different story - one in which gaming companies are actually making more money now than they were a few years ago (just listen to earnings calls). Once that happens, the lemmings will start jumping back on the bandwagon.

    ATVI is a money making machine, that's not stopping. I'll probably pick up additional shares in the coming weeks if it stays stalled at $11.

  • Report this Comment On February 25, 2011, at 5:49 PM, kariku wrote:

    Haven't you guys lost enough on ATVI already ?

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