A Tour de Force Portfolio

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

A single follow spot highlights the arc of a hand, the tensing of muscles before a leap and a soul stirring second when...time...stands...still as a mere mortal thumbs his nose at gravity. Years and years of pain wracked discipline and single minded dedication lead to that one second that thrills the rest of us.

No basketball, football or baseball player..this is a dancer displaying the mastery of a six centuries old art form.. ballet. No form of athletic training is more rigorous or disciplined. Approach investing with the same ardor and rigor by picking companies that are similarly disciplined and obsessed with execution.

The Fundamental Five

The very first thing a ballet student learns are the five positions: first, second, and so on. Like any prima ballerina assoluta (ballet rockstar) you need a core of five positions.

A defensive stock is a basic first position. When markets roil defensive stocks do the heavy lifting. (It's no easy trick lifting ballerinas overhead.) Philip Morris (NYSE: PM) is a tobacco products manufacturer that split off from Altria. Its yield at 3.80% is not as high, but there's a more lenient attitude toward smoking overseas, and so, better growth prospects. The 17.76 P/E is this high because Philip Morris has been climbing higher quietly unnoticed like a wisp of smoke.

Fool Dan Caplinger thinks highly of CEO Louis Camilleri whom executes with the dedication of a dancer and has the commitment shown by his 1.56 million shares as well as association with Altria for 30 years before becoming CEO of Philip Morris and CEO of Altria from 2002-8. Philip Morris reports on February 7. Goldman Sachs rated it a Conviction Buy on January 11 with a $103 price target citing continued emerging market growth with margins nearing developed markets'.

Speaking of Goldman Sachs (NYSE: GS), the best of breed investment bank is another core position. Financials are becoming more transparent (whether they like it or not) and we can now see the dancers' ugly feet and the sausage being made, but that's better than decades of opacity in the sector. Even without proprietary trading Goldman still makes money as shown by the huge beat on January 16 with revenues of $9.24 billion exceeding expectations of $7.67 billion for a rise of 12% year over year. Tangible book value per share increased to $134.06 per share just what it traded at days before.

Investment Banking and Institutional Client Services net revenues for Q4 were up 64% and 42% respectively. Why choose Goldman with its higher P/E of 13.52 and lower yield of 1.50% over J.P Morgan? Because it is more agile than other financials under all market conditions. Lastly, like the very best ballet troupes it only accepts the most talented and then trains them up the Goldman way.

Another core position should be Apple (NASDAQ: AAPL) a tech, a retailer, multitalented and a master of "spotting", the technique where a dancer keeps the head focused on a fixed point while performing dizzying turns. Yes, Apple keeps its head down, underpromises, and then outperforms.

At an 11.50 P/E and 2.10% yield Apple is cheap compared to tech rivals like Google and Amazon. The debate remains has Apple become less nimble, read innovative, to make the leaps of product design investors came to expect under Steve Jobs. Is demand decline for iPhone 5 the career killer the market predicts? On January 23, the show will go on with earnings including holiday sales. Apple will have to give a stellar performance to reassure worried shareholders. But this company with no debt and total cash of $29.13 billion has left audiences awestruck before.

Abbott Labs (NYSE: ABT) a Big Pharma name is no longer a lumbering giant after sloughing off its weakest divisions to AbbVie which split off January 1. Leaner and stronger, Abbott Labs is poised to outperform with a low beta of .44 and reliable earnings growth. AbbVie may lure investors with its higher yield of 4.70% but it got the hand-me-downs in the deal. Abbott has an 8.00 P/E, and yield of 1.70%. Fool Brenton Flynn in a Motley Fool video highlighted Abbott Labs as a way to invest in healthcare without patent cliff worries with upside coming from expanding margins and emerging market growth.

Unhindered by the weight of the pharmaceuticals division Abbott Labs can pirouette forward in China and India with expanding margins from the profitable divisions it kept: nutritionals, medical devices, diagnostics and branded generics.

With a mean price target of $47.86 there's plenty of loft left and with the lowest price target at $28.71 there is slightly more than 10% downside risk. Vision care company Bausch & Lomb is a rumored acquisition for Abbott. If it goes through and Abbott dives it should be snapped up on weakness.

Lastly, a cyclical with showmanship and that indefinable star power is Las Vegas Sands (NYSE: LVS). "Nothing succeeds like excess" is the mantra of the big Vegas gaming companies. Las Vegas Sands is the biggest name in gaming thanks to (or in spite of) founder and CEO Sheldon Adelson.

The P/E is the highest of these names at 30.36 but this volatile performer is the star of Singapore and Macau gambling. It has the largest square footage with four casinos generating 84% of its $2.8 billion in revenue in the last quarter outearning rival Wynn almost two to one. Risks for LVS are mainly slowdowns in China growth with the company heavily dependent on Asia earnings. Las Vegas Sands has a 1.90% yield and Adelson as a fellow shareholder (with Miriam Adelson) holds 88 million shares with another 100 million in Adelson trusts.

Encore! Encore!

These five companies have a passion and discipline that make them the outperformers they are. Each one also gives back to its audience (shareholders) with dividends. These companies rarely stumble but when they do like the troupers they are they get right back up. Shareholders can applaud their discipline and rigor but don't get too swayed by the show.  Due diligence requires you always take a peek backstage and don't be afraid to send in an understudy.

leglamp has no position in any stocks mentioned. The Motley Fool recommends Apple and Goldman Sachs. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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