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The Beginning of a Stock Portfolio Experiment

By Motley Fool Staff - Mar 15, 2017 at 4:04PM

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A Motley Fool analyst reveals the stocks she’s buying right now.

For new investors, picking good stocks is a daunting challenge. There are thousands of companies, countless investing metrics one can track, and then, of course, there's the unpredictability of the future that needs to be factored into the equation.

In an effort to help The Motley Fool's Gaby Lapera choose a handful of stocks to buy, a number of analysts shared with her their favorite stocks right now. Listen in on this week's episode of Industry Focus: Financials to hear which stocks our analysts recommended as well as which ones Gaby decided to add to her portfolio.

A full transcript follows the video.

This podcast was recorded on March 6, 2017.

Gaby Lapera: I don't know if you remember doing this. I don't know if our listeners remember this. We had a stock face-off series of shows a couple weeks ago, where Industry Focus hosts and analysts talked about some stocks that they liked, and I agreed that at the end of it that I would buy stocks if I liked them, and if they had done a good job selling me on it and I did a good job convincing myself that I actually wanted to buy them. So I wanted to talk a little bit about which stocks I actually ended up buying. I will say that before I decided to buy, I looked at all the fundamentals, and all of them looked very good on every company, which you might expect, because Industry Focus hosts and analysts were the people who had picked the companies. So I'm going to talk to you about some of the qualitative things that helped me make my choice.

As you remember, Maxfield, you and Jordan Wathen, you actually pitched JPMorgan Chase (JPM 2.98%), and Wathen pitched Moody's. I ended up picking JPMorgan Chase, and the reason basically comes down to the weight that both of these companies behaved during the financial crisis and the period leading up to the financial crisis. JPMorgan Chase did a great job of managing its risk, and Moody's was one of the reasons that the financial crisis happened, one could say, and that has made me not trust them very much in the long term. And I'm not really sure that they have fixed the problems that caused them to mislabel certain securities. So, JPMorgan Chase was my winner there. And I felt like, as the Financials host, I have to own at least one bank. I felt like I was cheating listeners by not owning at least one bank.

John Maxfield: Let me say something really interesting that I learned the other day about the rating agencies. Earlier in the week, I was on the phone with a CEO of one of our really large banks. And he told me that the ratings agencies are his single most important constituents. Above shareholders, above the board of directors, above regulators, above customers, above analysts. And I thought, "Wow, that's such an interesting point." Sorry, that's just a random thing, but I thought you would find it interesting.

Lapera: Yeah, that's definitely very interesting. And who knows, maybe my opinion about Moody's will change eventually, when I have more money to invest. But for now, I could only pick one, and JPMorgan Chase was my choice.

Then, in the American Outdoor Brands (SWBI 14.49%) versus [Anheuser Busch InBev] faceoff, I ended up going with American Outdoor Brands, mostly because I thought their umbrella business model was really interesting, the fact that they were getting into more technical things that they could do, they were buying these companies that had a lot of niche expertise, and they have a lot more room to grow versus the AB InBev of beer, which is basically a giant monolith of beer.

For healthcare, threw a little bit of a curveball, I ended up buying both [Gilead Sciences] (GILD 0.80%) and Illumina (ILMN 0.20%), because I think both of them have a lot of potential. Illumina, I really wish I had one of their machines when I was doing my master's work, I could have done so many very interesting things. But, alas, I was a lowly grad student without access to one in a lab. And Gilead, I think, has a lot of room to grow, and it's a little undervalued at this point. 

[8point3 Energy Partners] versus [General Electric] (GE 4.70%), I went with GE because the energy space, frankly, scares me, and I understand what GE does. I'm still not 100% sure what 8point3 does. For Shopify versus Facebook, unfortunately I couldn't buy either of them. Remember, if you will, that I mentioned that The Motley Fool has a great number of trading restrictions. We have trading restrictions on both Shopify and Facebook because we are using them for some unknown internal purpose, at least to me. But for the record, I would have bought Shopify, because I think their story was the more compelling of the two, even if their fundamentals work, perhaps, not as compelling. But, yeah, that's what I ended up picking. If you guys have any questions about why, go ahead and ask me. I don't know that I'll be able to answer them satisfactorily to you. I hope you guys enjoyed that week, I got a lot of feedback saying that you did, and maybe we'll be able to do something like that again in the future.

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Stocks Mentioned

JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$117.32 (2.98%) $3.40
General Electric Company Stock Quote
General Electric Company
$67.08 (4.70%) $3.01
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$63.08 (0.80%) $0.50
Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
$16.44 (14.49%) $2.08
Illumina, Inc. Stock Quote
Illumina, Inc.
$193.93 (0.20%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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