Stock Madness 2006: Fast-Break Offense

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 looking forward to this semifinal match against Rex Moore. He's got a good team of stocks, but I am ready for the challenge.

In previous rounds, I stressed the individual strengths of my stocks. But my stocks also work together as a unit. Take a look at my team as a hypothetical portfolio.

My team runs the gamut in terms of size and industry. I've labeled them as "value," "growth," or "blend" for illustrative purposes, although I don't really like pigeonholing stocks into a category.

As you can see, my portfolio is on the aggressive side, with three growth stocks. That's OK. These growth stocks are carefully chosen as leaders in their industry. Red Hat is the biggest name in open-source software, Hansen's energy drinks are taking up increasing shelf space at major retailers, and Motley Fool Hidden Gems pick Blackboard is the dominant player in the educational-software space. If you are going to pay up for growth, I say go for the best. The potential returns from these stocks will be worth the extra risk.

Meanwhile, ExxonMobil and WWE offer some less volatile investments to balance out the portfolio. Stalwart ExxonMobil is a safe long-term investment as a diversified oil company with a history of increasing dividends. WWE's strong cash flow, meanwhile, supports a 6% dividend yield and the chance for capital appreciation.

I realize that some investors are skeptical about Hansen Natural's continued growth. A look at its stock chart is enough to make anyone dizzy. But keep in mind that Hansen is well positioned in the two fastest-growing drink segments -- natural beverages and energy drinks. Energy drinks alone make up a $3 billion -- and growing -- market. Is a forward P/E of 24 that outrageous for this scrappy beverage maker?

My esteemed opponent
I hope Rex doesn't hide behind his two blue-chip companies. He has not yet made a compelling case for choosing the smaller Expedia (NASDAQ:EXPE) and RF Micro Devices (NASDAQ:RFMD). Maybe he is worried about Expedia's disappointing results. Maybe he doesn't know what RF MicroDevices actually does.

Rex also likes to talk about how the "tried and true will beat the bold and new." Funny, I always see him running around with the Hidden Gems crowd, looking for the next Microsoft.

Rex, take a look at Blackboard, Red Hat, and Hansen Natural, because you just might find it.

Rex Moore's rebuttal
I have to give Joey credit for the spin he's putting on his portfolio mix. He is stuck with his starting five and has to make the best of it. But strip it down to the basics, and the unbalanced-ness of it all jumps right out at you: one large cap, a middling mid-cap, and three small caps whose next big 30% moves could just as well be down as up.

I know he accuses me of hiding behind my blue chips, but I'm blessed with these stocks and will let them lead the way. Did San Antonio coach Gregg Popovich mind it when Tim Duncan and David Robinson led his team to three NBA titles? Of course not. You go with your strength, and let your other guys play supporting roles. That's the way to greatness.

Who moves on to the championship? It's all up to you. Check out Rex's team, and then cast your vote.

Joseph Khattab wonders when Bernie Mac's film Mr. 3000 will get the critical acclaim it deserves. He owns shares of Blackboard and WWE. Rex Moore has no position in any company mentioned in this article. The Motley Fool has a disclosure policy.