Investment Club

I recently attended my first meeting of CHIC (Capital Hill Investment Club) as a full member. All that meant is I was able to vote on a handful of items that came up. Since a few members were absent, we decided that everyone should stack rank our existing stocks by whatever criteria we choose. The goal is to compare the various lists and perhaps prune a stock or two from our holdings.

Obviously, alphabetical or stock price isn't very useful! I've decided to rank our holdings by return on equity, a percentage than encompasses profit margin, asset management, and financial leverage. If I have extra time, I might choose a second criterion to rank the companies against.

I'll be studying up on financial terms as I go. Many years ago I became interested in personal finance issues, but for the last two or three years all my investments have been through retirement plans provided at work, which don't offer many choices.

Here are the rankings, using data taken from MSN Money - Finance Site.

1. Johnson & Johnson - 29.5%


2. Bed, Bath & Beyond - 20.4%


3. Home Depot - 20.0%


4. Affliated Computer Services - 19.1%


5. Health Management Associates - 17.6%


6. Walgreens - 16.4%


7. Commerce Bancorp - 14.7%


8. Starbucks - 14.6%


9. Fiserv - 14.5%


10. AFLAC - 14.4%


11. O'Reilly Automotive - 13.2%


12. Pfizer - 12.1%

Companies we are considering purchasing are:

1. Lincare Holdings - 27.6%


2. Omnicom Group - 19.3%


3. Washington Mutual - 16.7%


4. RedMed - 15.6%

One thing for me to research is industry averages, as a typical ROE probably varies from industry to industry. When it comes time for me to investigate stocks, they will mostly likely be in the healthcare, biotech, or finance industries.

It will be interesting to see what criteria the other club members used, and compare our various lists.