One Person's Trash Is Another Person's Treasure Portfolio

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the "One Person's Trash Is Another Person's Treasure" portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill, and would expect to drastically outperform the benchmark S&P 500 over the coming 12 months. If you're interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:

Now, let's get to the portfolio and see how it fared this week:


Cost Basis


Total Value



























Arkansas Best





Arch Coal
























Dividends receivable




Total commission




Original investment




Total portfolio value




S&P 500 performance



Performance relative to S&P 500



Source: Yahoo! Finance, author's calculations.

This week's winner
With plenty of winners to choose from this week as the broad-based S&P 500 went a perfect five-for-five in the plus column, coal miner Arch Coal (NASDAQOTH: ACIIQ  ) takes home the prize, with a 10.6% gain. Although no one specific news story moved Arch higher, it's been finding its footing ever since Moody's raised its outlook on the coal industry from negative to stable in August. I remain one of the few bulls still left in coal, and feel that, with the energy source providing 40% of all electrical generation in the U.S., it certainly isn't going to disappear overnight. As an added bonus, next week we get a $0.03 per share quarterly payout from Arch.

This week's loser
My favorite type of loser is one where the worst-performing stock in the portfolio still rose for the week! That's exactly what happened this week with utility stock Exelon (NYSE: EXC  ) adding just 0.1% from where it started. As you might expect, Exelon is a fairly defensive play, so when the market is in full-rally mode, it often lags the broader S&P 500. However, I'm going to give Exelon a pass this week, and you should, as well, because we also collected a $0.31 quarterly dividend from the company, which helped fatten up our dividends receivable! If you notice, we've more than covered the cost of our commission just through dividend income over the past seven months.

Also in the news...
The Dell's (UNKNOWN: DELL.DL  ) of our Lives day-time drama took an interesting turn this week, with activist investor Carl Icahn announcing that he will no longer try to stop Dell from going private, but issued one last jab at the board and Michael Dell that the offer was not in the best interests of shareholders. With a vote expected today (Sept. 12), we will soon know the fate of Dell. If you're curious as to my position, since I own shares of Dell, I voted in favor of the leveraged buyout. With shares trading about $0.03 below the offer-plus-special-dividend price, shareholder approval of the LBO is expected.

Audio-accessories specialist Skullcandy (NASDAQ: SKUL  ) had a notably good week, as well, up 9.2%, following an upgrade from Raymond James to market perform from underperform. The rating change by Raymond James was done on the basis of a low valuation for Skullcandy, confidence in the new management team, and forecasts that show Skullcandy returning to profitability in 2014. I've neither added to my position, nor sold any of my own personal shares, but am eager to see how this turnaround progresses into next year.

Finally, office-supply superstore Staples (NASDAQ: SPLS  ) tacked on close to 7% this week following the announcement that it was going to keep its third-quarter dividend steady at $0.12 per share. The dividend will be payable on Oct. 17 to shareholders on record as of Sept. 27. On a bigger scale, remember that we're in the bread-and-butter quarter for Staples (back-to-school), so it has a chance to really shine in its third-quarter earnings report with OfficeMax and Office Depot preparing to shutter stores for their merger.

We can do better
This doesn't happen all that often, but, in spite of the S&P 500 advancing in each of the past five days (it's actually up now for seven straight, but who's counting), this contrarian and deep-value portfolio handily outperformed this week. Huge gains this week by the likes of Orange, QLogic, and portfolio bell-cow Arkansas Best helped push this portfolio higher by close to 6%... in a week! Although we still have plenty of time to go, the underperformance gap has closed to its lowest level in months, just 2.6%. I'm confident this portfolio of contrarian and beaten-down stocks has what it takes to outperform the S&P 500 over the long run.

Check back next week for the latest update on this portfolio and its 10 components.

Your search for the next great "out-of-the-box" investment opportunity doesn't have to end here! Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

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: 2635927, ~/Articles/ArticleHandler.aspx, 5/24/2016 3:59:11 PM

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...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and investment planning. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest.

Today's Market

updated Moments ago Sponsored by:
DOW 17,724.81 231.88 1.33%
S&P 500 2,076.93 28.89 1.41%
NASD 4,863.29 97.51 2.05%

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

5/24/2016 3:30 PM
ACIIQ $0.37 Down -0.01 -2.12%
Arch Coal, Inc. CAPS Rating: *
DELL.DL $0.00 Down +0.00 +0.00%
Dell CAPS Rating: *
EXC $33.94 Up +0.21 +0.61%
Exelon CAPS Rating: ****
SKUL $3.65 Up +0.10 +2.82%
Skullcandy CAPS Rating: ***
SPLS $8.52 Up +0.24 +2.84%
Staples CAPS Rating: **