Analysts Look Back: Our Best and Worst Stocks of 2012

Over the past year, we three Foolish analysts -- Travis Hoium, Alex Planes, and Sean Williams -- have come together to decide whether certain stocks were worth your money or whether you'd be better off staying away. We've been debating the merits of individual stocks all year, and after 21 up-or-down picks, we're beating the S&P 500 by nearly 200 points.

A new year is fast approaching, so we thought we'd take a look back at our selections to give you an understanding of how we reached our decisions, what our thought processes might have been, and how we've learned from our mistakes to make sure that 2013 brings even better results to our TMFYoungGuns CAPS portfolio. Today, we'll be taking a look at our favorite calls, as well as the calls we've been burned on. Coming up later this week, we'll also take a look at the hardest calls we've had to make, our biggest regrets, and the picks we've made where we wished our two fellow analysts had seen it our way.

Favorite call
Alex:
Is there going to be any disagreement here? We all thought Green Mountain Coffee Roasters (NASDAQ: GMCR  ) was undervalued in July, and it's been by far our best-performing stock since that call. I've been repeatedly surprised at the strength of its rebound, but I'm not going to look this gift horse in the mouth as long as it keeps running so well. I'm proud of the analysis I put Green Mountain through in that debate, and it's vindicated my optimism well beyond my early expectations.

Travis: My two favorite picks are actually losers for us so far, but they were unanimous selections that went against the grain. First is our underperform call on Amazon.com (NASDAQ: AMZN  ) which is one of The Motley Fool's newsletter's best picks. We said in March that the stock would underperform the market, and since then sales growth has slowed and profits have tumbled. This hasn't led to a falling stock price, but give it time.

Second is our outperform call on SunPower (NASDAQ: SPWR  ) , which we knew was a risky pick but we all thought would outperform over the very long term. It hasn't made us anything yet, but margins are improving and competitors in China are getting weaker by the day. In another year this may be our top performer.

Sean: I, too, was tempted to make Green Mountain my favorite pick thus far, but instead I've chosen Bank of America (NYSE: BAC  ) which has returned 30 points over the S&P 500 in just three months. I've owned Bank of America in my personal portfolio for more than a year, and it's vindicating to see a bank so incredibly cheap relative to book value turning things around and improving its liquidity. My only regret is not throwing B of A on the table in front of Alex and Travis sooner!

Worst call
Alex:
We may have dodged a bullet by avoiding Chipotle Mexican Grill (NYSE: CMG  ) in June, but our indecision cost us almost 40 points on an underperform call. Sean was the only one who saw an overvalued company that was bound to run into trouble, but I don't think he knew just how quickly trouble would come. It was clear to me then that Chipotle was a bit richly valued, and had I paid closer attention to the trend rather than the average, I would have joined Sean in predicting underperformance.

Travis: We've all been very wrong on the near-term fortunes of Intel (NASDAQ: INTC  ) . We underestimated the decline of the PC market and how little the market would appreciate what we perceived as value. Right now, this is our worst pick and there doesn't appear to be any momentum building in the near future.

Sean: I feel we all allowed emotion and near-term negativity to cloud our better judgment when we chose Carnival (NYSE: CCL  ) to underperform in May. The cruise line operator had dealt with two devastating disasters just months before and we all assumed that it'd be a year or two before things were completely sorted out. However, consumer spending on cruises dipped for only a few weeks and Carnival's results have improved steadily since our selection.

Foolish final thoughts
It certainly has been an interesting year to debate stocks. As you can see, even when we arrive at similar decisions, we can always find a way to approach those decisions with a unique perspective. The three of us look forward to debating many more stocks next year, and we hope you'll follow along. We're always interested in finding out what our readers think, so feel free to leave us a comment below. If you'd like to follow our selections, you can watch our TMFYoungGuns CAPS portfolio.

Sean's best call has trounced the market in 2012, but will B of A continue to be one of our best calls in 2013? The banking industry can be confusing if you're not well versed in its intricacies, which is why The Motley Fool has created an exclusive premium research service for interested investors. You'll find a wealth of great information explained simply, whether you're a long-term investor or are just looking to jump in today. Got questions on Bank of America? Get the answers you need in our research service. Click here to subscribe now.


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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.

  • Report this Comment On December 23, 2012, at 12:03 PM, bfsteck wrote:

    What about CORNING !!! It was a huge pick, maybe "Pick of the Year" (?) I can't read EVERYTHING I get from MFbut after shouting about it I can't remember hearing much about it. I do know it is WAY DOWN.

  • Report this Comment On December 23, 2012, at 12:33 PM, TMFBiggles wrote:

    @ bfsteck -

    Corning's nowhere near our best pick, nor is it our worst pick. It's kind of in between. I voted it down but was outvoted by Travis and Sean. Right now, it's only down about 3 points for us.

    - Alex

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