Progress Report - SYK, JOY, AFL, PEP, TW

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We spend quite a bit of time researching and identifying great companies and targeting low valuation ranges that when we do enter trades or make recommendations we can sleep well at night and wait for them to work for us. Patience is critical. Whether to avoid chasing a favorite stock or also waiting for the market to recognize undervalued issues that we have already discovered. As we have highlighted in recent weeks, we have trade recommendations in progress across at lease 15 different issues. In this update we'll highlight some of the picks and how they're faring.

Aflac (AFL) originally posted in Portfolio Insurance – Low valuation signal with AFLAC and we highlighted the split trade to Switch Pepsi for Aflac at that time. In October, we started to see the fruit of the effort with the paired trade indicating a potential 27% return. Since then, Aflac has continued to climb to the midpoint of the valuation range. Total paired trade potential return over 38% since those original posts. Note, since we recommended the exit from Pepsi (PEP) it has done very little.

Joy Global (JOY) did not receive a lot of happiness in the spring and summer of 2012 and we highlighted this Low Signal in Joy Global back in May. Since then the stock has started to deliver and is now up over 10% with more room to run.

Stryker (SYK) just pre-announced higher than anticipated earnings in their fourth quarter and raised expectations for the year. Again, we originally recommended Stryker during the summer doldrums after highlighting it's declining valuation a few weeks earlier. Analysts are now resoundingly positive on the stock and are jumping on the bandwagon here in the high 50s - almost 15% above our original recommendation of $51.30. Of course, we're counting on the markets renewed interest in the stock and continuing solid performance to return it to the high end of the Purple Chips valuation range.

Lab Corp (LH) is a Top-25 Purple Chip, like Aflac and Stryker. It has drifted in the last few weeks of 2012 and has stayed underneath our Low valuation signal for some time only recently peaking above the range. On any correction or downdraft we continue to keep an eye on Lab Corp.

John highlights these and other issues in this latest update: