Turning Back Time: The Year-End Portfolio Review

In the past 12 months, I've highlighted more than two dozen stocks. Now it's time to be accountable. I'm going to give my up-to-date opinion on every pick, keeping the best ones and disposing of the deadwood. As you can see from the table below, my picks have outpaced the market by a wide margin, generating a 25% return vs. a 12% loss for the S&P 500.

As I said in my Top 10 column late last year, I like "real companies with real profits and real assets." The companies here won't revolutionize the world. They're not dazzling, not big-cap and not tech. For that matter, they're not even particularly compelling. But they are real, and they've helped me make a buck or two this year. I hope they've helped you, too.

The Value Portfolio Here's a full update on the picks from 2001
Stock	Date of Column	Historic Cost	Sales Price/Current	Return
Whirlpool (WHR:NYSE)	Dec. 19, 2000	$40.00	$65.54	63.85%
Circuit City* (CC:NYSE)	Dec. 28, 2000	10.80	16.84	55.93
Circuit City** (CC:NYSE)	Sept. 18, 2001	9.91	17.30	74.57
UAL* (UAL:NYSE)	Dec. 28, 2000	35.88	33.85	-5.66
E*Trade (ET:NYSE)	Dec. 28, 2000	7.34	7.95	8.31
J.C. Penney (JCP:NYSE)	Dec. 28, 2000	10.25	24.70	140.98
Raytheon* (RTN:NYSE)	Dec. 28, 2000	27.50	27.74	0.87
TRW (TRW:NYSE)	Dec. 28, 2000	36.38	38.66	6.27
Georgia Gulf (GGC:NYSE)	Dec. 28, 2000	15.00	17.52	16.80
Hasbro (HAS:NYSE)	Dec. 28, 2000	10.06	16.46	63.62
Office Depot (ODP:NYSE)	Dec. 28, 2000	6.94	16.12	132.28
H.B. Fuller (FULL:Nasdaq)	Dec. 28, 2000	20.15	29.87	48.24
Safeco (SAFC:Nasdaq)	Jan. 26, 2001	24.00	32.09	33.71
Delta Air Lines (DAL:NYSE)	March 30, 2001	39.50	28.07	-28.94
Centennial Bancorp (CEBC:Nasdaq)	March 30, 2001	7.75	7.12	-8.13
Northwest Airlines (NWAC:Nasdaq)	April 17, 2001	23.50	17.36	-26.13
Liz Claiborne (LIZ:NYSE)	April 24, 2001	44.50	48.94	9.98
Kmart (KM:NYSE)	May 2, 2001	10.40	5.81	-44.13
Ameritrade (AMTD:Nasdaq)	May 9, 2001	7.55	5.68	-24.77
York International (YRK:NYSE)	May 10, 2001	30.44	36.10	18.59
Textron (TXT:NYSE)	June 5, 2001	58.97	39.20	-33.53
Continental Airlines (CAL:NYSE)	July 12, 2001	50.00	22.81	-54.38
Toro (TTC:NYSE)	July 24, 2001	43.26	45.91	6.13
Manpower (MAN:NYSE)	Aug. 7, 2001	31.77	31.95	0.57
Legg Mason (LM:NYSE)	Oct. 3, 2001	40.22	46.24	14.97
Raymond James (RJF:NYSE)	Oct. 3, 2001	28.35	31.60	11.46
Snap-On (SNA:NYSE)	Nov. 1, 2001	27.20	30.95	13.70
Portfolio's Time-Weighted Return:				25%
S&P 500's Time-Weighted Return:				-12%
* Positions closed. Sell ratings issued in Aug. 27 column. ** Recommended repurchase of Circuit City in a Sept. 18 column. Source: Alsin Capital Management

Stock by stock, in the order in which they were highlighted, here's my take on each:

Whirlpool (WHR Quote - Cramer on WHR - Stock Picks)

Sell: I've lost my confidence in the accounting and earnings quality at Whirlpool. Too much of the underlying earnings growth is attributable to nonoperating activities (pension income, Brazilian tax credits, etc.). It's hard to be patient when a batch of "interesting" restructuring charges is rolled out each and every quarter.

Circuit City (CC Quote - Cramer on CC - Stock Picks)

Sell: Just about the most fun a money manager can have is to make the same money twice. I did it with Circuit City, recommending a buy last December, a sale in August and a buy in September. Now I'm taking it off the table again.

My valuation work indicates a fair value of $20 for Circuit City, but that is predicated on significant improvements to operations. I know this stock can go higher, but my confidence in management has been eroding. Let's take the money and run (for the second time).

UAL (UAL Quote - Cramer on UAL - Stock Picks)

Buy: I view a position in an airline stock as sort of a quasi-call option on the economy, and I have recently put a small portion of my portfolios in the sector. I like the odds that UAL will go higher in the next couple of years, maybe surpassing $30 a share. With $4 billion in unencumbered aircraft, $2.7 billion in cash, and a dominant franchise in the West and the Pacific, this company has staying power. Early signs are encouraging that new CEO John Creighton (formerly CEO of Weyerhauser) may bring sanity back to the bloated cost structure.

E*Trade (ET Quote - Cramer on ET - Stock Picks)

Sell: I'm lucky to make a profit on this stock, which traded most of the year below my recommended price. See the columns I wrote on the brokerage group in September and October for more appealing alternatives to E*Trade.

J.C. Penney (JCP Quote - Cramer on JCP - Stock Picks)

Buy: Ignore the increase in value since December. There is still plenty of oomph in this equity. I wrote a column in March when this stock was trading at $16 and change, projecting a target price of $50. A recent string of impressive sales gains at both the department-store division and at wholly owned Eckerd's is making the $50 target price look reasonable. Twelve to 24 months from now, my valuation work indicates a fair value of $25 a share for the department-store and catalog division and another $25 or more in value for Eckerd's.

Raytheon (RTN Quote - Cramer on RTN - Stock Picks)

Sell: I'll stay with the Raytheon sell rating from my August column. With disappointing progress on debt reduction and with defense stocks inflated by recent events, there's no reason to take another look here.

TRW (TRW Quote - Cramer on TRW - Stock Picks)

Neutral: I'll stay neutral on TRW even though I ripped the accounting of the company in a recent column. There is ample potential for improvement here. Stay tuned.

Georgia Gulf (GGC Quote - Cramer on GGC - Stock Picks)

Sell: I'm just clearing the decks a bit by selling Georgia Gulf. Business is tough in the current environment, obviously, and I'm satisfied with a 17% profit in a down market.

Hasbro (HAS Quote - Cramer on HAS - Stock Picks)

Neutral: My valuation work has consistently put Hasbro's value at $18 to $20 a share. This was one of my better turnaround calls last year, when an operational mess distracted most investors from the strong franchise of Hasbro, which includes brands like Playskool, Milton Bradley and Parker Bros.

Office Depot (ODP Quote - Cramer on ODP - Stock Picks)

Buy: Even though Office Depot is up 132% since I recommended it, I keep putting new money to work in this company. Office Depot generates sales slightly higher than Staples (SPLS Quote - Cramer on SPLS - Stock Picks). Compared with Staples, Office Depot has a stronger operation internationally and on the Internet. While it's weaker in the domestic retail business, it's catching up quickly. Over time, I expect Office Depot, with a $5 billion market cap , to have a value similar to Staples, which has an $8 billion market cap.

H.B. Fuller (FULL Quote - Cramer on FULL - Stock Picks)

Sell: Here's another small-cap that has moved nicely (up 48%) while the market has struggled. Take the profit. It's at fair value now.

Safeco (SAFC Quote - Cramer on SAFC - Stock Picks)

Sell: New management is doing a wonderful job turning Safeco around, and the company appears on solid footing. But with so many quality opportunities in the market, let's take the 34% gain on Safeco and redeploy the capital.

Delta Air Lines (DAL Quote - Cramer on DAL - Stock Picks)

Sell: Nothing specific here. I just don't want to have that much exposure to the airline group.

Centennial Bancorp (CEBC Quote - Cramer on CEBC - Stock Picks)

Buy: I'm not going to pound the table on this small-cap bank, but I think it will outperform market indices from here. It has a chance to get to $9 or $10 in the next 12 to 18 months.

Northwest Air (NWAC Quote - Cramer on NWAC - Stock Picks)

Sell: Same as Delta comment above.

Liz Claiborne (LIZ Quote - Cramer on LIZ - Stock Picks)

Buy: One of my favorite stocks for the long haul, Liz Claiborne doesn't have the fashion risk of a Tommy Hilfiger (TOM Quote - Cramer on TOM - Stock Picks) or Ralph Lauren (RL Quote - Cramer on RL - Stock Picks) because of the diversified nature of its business. Some catalysts here could spark a better stock price in the near future, including a successful integration of the Mexx acquisition (in Europe) and the rollout of product to all Target stores.

Kmart (KM Quote - Cramer on KM - Stock Picks)

Sell: I like CEOs who don't pull any punches: If business is crap, say so. Don't get on conference calls after a weak quarter and pretend everything is swell if it ain't. I won't name names, but you get the picture.

Ameritrade (AMTD Quote - Cramer on AMTD - Stock Picks)

Sell: Just trying to clear the decks again. Go with financial strength first in the brokerage sector -- see the brokerage columns that I wrote several weeks ago.

York International (YRK Quote - Cramer on YRK - Stock Picks)

Buy: This is one of my favorite stocks, and one of my Top 10 Turnarounds for 2002. This company's turn is just getting started. See my recent column on the company.

Textron (TXT Quote - Cramer on TXT - Stock Picks)

Buy: I made a mistake recommending this stock in June. I thought management was making progress on a series of operational difficulties, but I was wrong. Now that it's in full turnaround mode, I like the stock on a risk/reward basis. It's one my Top 10 Turnarounds for 2002.

Continental Airlines (CAL Quote - Cramer on CAL - Stock Picks)

Neutral: Newest fleet, best management, happiest customers -- even though UAL has more upside than Continental, this stock will outperform the market if the economy rebounds.

Toro (TTC Quote - Cramer on TTC - Stock Picks)

Neutral: I'm struggling with this story. I can't rule out some sort of disappointment in the near future. (I'm not sure that its end markets are holding up.) I'm neutral pending further developments.

Manpower (MAN Quote - Cramer on MAN - Stock Picks)

Buy: I really like this stock, another one of my favorites. As it's one of my Top 10 Turnarounds for 2002, I think the company has yet to see the benefits of a variety of operational and structural changes. Once the economy picks up, look out.

Legg Mason (LM Quote - Cramer on LM - Stock Picks)

Buy: As I pointed out in an October column, my valuation of the money-management business at Legg Mason plus the amount of net cash equivalents (net of all debt, both short term and long term) amounts to about $42 a share. With the stock at $46, you don't have to be a genius to recognize that the brokerage and investment banking businesses are worth more than the difference, $4 a share.

Raymond James (RJF Quote - Cramer on RJF - Stock Picks)

Buy: This is another one of my favorites for the long haul. The mega brokers are still "in recovery" (read: bloated) after the IPO excess of the last cycle. I prefer regional brokers in the new cycle.

Snap-On (SNA Quote - Cramer on SNA - Stock Picks)

Buy: After the recent 14% rally, I'm tempted to rate Snap-On a neutral. Let's just say that at the current quote, it's not a screaming buy, but it has a well-respected franchise and a decent new product pipeline, suggesting there's enough upside to outperform the indices in the next year.