Transactions:  GRMN, LOW, RIG, and HP

On July 29, we purchased:

• 15.372 additional shares of Garmin Ltd. (GRMN) at  $45.34
• 39.416 additional shares of Lowe’s Companies Inc (LOW) at $20.22
• 11.974 initial shares of Transocean Inc. (RIG) at $133.62

We sold 27 shares of Helmerich & Payne Inc (HP), a gas and drilling company, at $57.27 reducing the weight of this holding to 2.9%.  Transocean, a deep sea oil and gas drilling company,

On July 30, we purchased an additional 15.682 shares of Garmin at $39.250.  Garmin took quite a beating last week when it reduced its 2008 earnings guidance from $4.40 to $4.13 per share.  Garmin also reduced its revenue guidance from $4.5 billion to $3.9 billion.  It appears that the bad news is more than reflected in the current stock price of $33.64.

A stock selection guide (SSG) for Garmin can be found here.  This SSG assumes a reduced revenue growth of 12% and a reduced pre-tax profit marin in five years.  The SSG assumes a future P/E of 15 (current P/E is 8).  The projected average return is 23.1%.

Portfolio Transactions

We sold Stryker Corp (SYK) at $67.48 and replaced it with Medtronic Inc (MDT) at $52.61. We sold Getty Images Inc (GYI) at 31.00 per share. We purchased Superior Energy Services (SPN) at $39.20.

SAP AG (SAP)

SSG and PERT | Google Finance | Company Website

We purchased an initial position in SAP AG on June 13, 2007. Here is the stock selection guide we used for the purchase decision.

Wells Fargo & Company (WFC)

SSG and PERT | Google Finance | Company Website

We purchased an initial position in Wells Fargo & Company on June 13, 2007.  This replaces Commerce Bancorp.  Here is the stock selection guide we used for the purchase decision.

American International Group (AIG)

SSG and PERT | Google Finance | Company Website

We purchased an initial position in American International Group on June 13, 2007.  This replaces Capital One Financial in the financial sector of our portfolio.  Here is the stock selection guide we used for the purchase decision.

Microsoft (MSFT)

SSG and PERT | Google Finance | Company Website

We purchased an initial position in Microsoft on June 13, 2007. Here is the stock selection guide we used for the purchase decision.

Portfolio Transactions

We made the following changes to our portfolio:

• Added to our positions in Bed Bath & Beyond (BBBY) and Amgen (AMGN).
• We sold Commerce Bancorp (CBH) and Capital One Financial (COF). There will be replaced with American International Group (AIG) and Wells Fargo (WFC). That will keep the same exposure to financials but with better stocks that have a higher projected average return.
• We purchased Microsoft (MSFT) and SAP AG (SAP).
• We are replacing Occidental Petroleum (OXY) and ChevronTexaxo (CVX) with Conoco Phillips (COP) and Helmerich & Payne (HP). These keep about the same exposure to the energy sector but split between a mega cap oil company and an oil services company. Both companies pay dividends (COP 2.1% and HP 0.6%).

All of these trades together will increase the overall quality and projected average return of the portfolio. See Manifest Investing dashboard. We are still a little ahead of the S&P 500 for the year.

+GYI +WAG -ACS -MMC

Based on our email discussion, we sold Affiliated Computer Services and Marsh & McClennan Companies. We took an initial position in Getty Images and Walgreen Co. (The links will take you to the stock selection guide we used.) We can purchase more of these when either of these stocks dip in price.

These two additions have raised the overall quality rating (now 70.3) and the projected average return (12.3%). See portfolio dashboard here.

Looking at portfolio diversification, we are diversified across seven sectors. We are still weighted a little too heavy in the health care sector. Here is table from Morningstar showing our actual diversification.

Walgreen Company (WAG)

SSG and PERT | Google Stocks | Company Website

We purchased an initial position in Walgreens on November 22. Here is the stock selection guide we used for the purchase decision.

June Transactions

On Wednesday, we added 18.8 shares of SNV and 23.9 shares of MXIM. We closed our positions in HDI (20.1 shares) and FITB (39.9 shares).  On Friday, we added 11.4 shares of JKHY, 9.8 shares of LOW, 12.1 shares of AMGN, and 10.3 shares of COF.

This reduces the number of companies in the portfolio to 24.  We only have 1.1% in cash.  UTSI jumped for $6.50 to $7.79 this week.  So maybe we should hold a while more.

Here is a dashboard for the portfolio reflecting these transactions.