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!
I'm very pleased to see that my team has something that my rival Nate Parmelee's doesn't: two steady, stable stalwarts that can anchor a portfolio for decades to come. Johnson & Johnson's (NYSE:JNJ) brands are recognized and used around the globe, and it's sitting in the demographic sweet spot as an aging population drives up demand for medicine, medical products, and other consumer goods. Right now, the price is sitting about where it was four years ago, and I think it's a bargain.
Procter & Gamble (NYSE:PG) complements J&J nicely, and I consider these guys my "twin towers." They provide the senior leadership (P&G is 169 years old!) that I hope will carry me to the championship game.
Portfolio Recovery Associates (NASDAQ:PRAA) has nearly doubled since I recommended it to Motley Fool Hidden Gems subscribers in mid-2004. It collects on debt that the credit card companies have given up on, and you know that's a growing market.
My team fills out nicely with RF Micro Devices (NASDAQ:RFMD) and Expedia (NYSE:EXPE). The former is heavily involved in the wireless worlds of cell phones, satellite radio, and global positioning systems (GPS). The latter is a world leader in online travel services.
My team touches every aspect of your life, and there's a good chance you actively use four out the five companies' products or services. As for Portfolio Recovery, I hope you never get involved with it!
Nate's lineup appears to have too many solid but second-tier players. Asset AcceptanceCapital pales in comparison to Portfolio Recovery's discipline and brilliance in the debt-collecting space. Wells Fargo doesn't carry the cachet of Citigroup (NYSE:C) or Bank of America (NYSE:BAC). 3Com lives in Cisco's shadow. Intel is certainly the world's leading chipmaker, but Advanced Micro Devices has more recent innovations, continues to gain market share, and has eaten Intel's lunch in stock performance over the past few years.
My team's financial strength and demographic positioning should carry it to victory in this first round.
Nathan Parmelee's rebuttal
Some of the names on my team may be unfamiliar to investors, but second-tier? That's a low blow. Wells Fargo has rewarded investors handsomely for quite some time. Furthermore, Warren Buffett's Berkshire Hathaway substantially increased its already large holdings in Wells Fargo during 2005. Both teams have financial strength in spades, but my team comes with a far better price tag.
Check out Nate's team, then vote for the winner!
Rex Moore believes in his team so much that he owns shares in three of the members: Johnson & Johnson, Procter & Gamble, and Portfolio Recovery Associates. Nathan Parmelee owns shares in Portfolio Recovery Associates, but has no financial stake in any other companies mentioned. Bank of America is a Motley Fool Income Investor pick. The Fool has a disclosure policy.
